The Albanese Labor Government has teamed up with the Greens and Senator David Pocock to block the Coalition’s attempt to throw out onerous new regulations for local accountants, bookkeepers and tax agents.

Eight Senate crossbenchers yesterday joined the Coalition to vote in support of a disallowance motion which would have nullified the Tax Agent Services (Code of Professional Conduct) Determination 2024.

On the floor of the Senate, the Government capitulated and finally admitted the regulation is defective and significant changes are required.

It remains to be seen whether the Assistant Treasurer will deliver on these piecemeal changes or backflip yet again. With these embarrassing, last minute concessions it is now another deal with the Greens that has blown up in the Government’s face.

The Government’s approach to consultation, communication and stakeholder management on these regulations has been bizarre and disrespectful.

Nine weeks after making this law, the Assistant Treasurer finally started consulting directly with industry stakeholders just hours before it was set to be disallowed.

This desperate attempt to salvage the regulations came after Stephen Jones had repeatedly told tax practitioners their serious concerns were unfounded, and the new regulation was ‘modest’.

It’s too little, too late and a Coalition Government would entirely reverse these regulations and unwind this attack from Labor and the Greens.

Shadow Assistant Treasurer and Shadow Minister for Financial Services Luke Howarth said this is bad government and the grassroots advocacy campaign from local tax practitioners has been effective and should not stop.

“These are small and family businesses who are some of the most trusted members of our community and they should be treated with respect. The Albanese Government has left them distraught and wondering whether they should stay in the profession.

72,000 tax practitioners, many small or individual practices, have been burdened with bad regulation in response to the sins of a few partners at PWC. A local BAS agent in North Lakes is very different to an international tax partner at PWC.

These new regulations are unnecessary and will drive up costs for individuals and small businesses who rely on and trust tax professionals to help manage their financial affairs.”

Shadow Assistant Minister for Competition, Charities, and Treasury Senator Dean Smith said the Government’s eleventh-hour concessions were a sign of a desperate Government operating in crisis mode.

“With the support of eight Senate crossbenchers and the entire tax practitioner community, we have sent a clear message to the Government about these far-reaching and poorly drafted regulations.

The ten leading professional associations have come together to repeatedly support the disallowance motion and secure multiple backdowns and concessions from the Government.
The Government’s chaotic process has been worst-practice consultation, communication and policymaking and the thousands of local accountants and bookkeepers who have been left reeling deserve better.”

Background:
• The Tax Agent Services (Code of Professional Conduct) Determination 2024 (the Determination) is a disallowable instrument made on 2 July 2024 which imposes new obligations on registered tax practitioners.
• The Determination has received significant criticism from the peak professional accounting and tax practitioner bodies and has been subject of a campaign from accountants, bookkeepers and tax agents to have it withdrawn or disallowed.
• Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, The Tax Institute, Australian Bookkeepers Association, Institute of Certified Bookkeepers, Institute of Financial Professionals Australia, Financial Advice Association of Australia, NTAA PLUS and SMSF Association
(collectively the Joint Bodies) wrote to the Assistant Treasurer on 15 July 2024 to express strong concerns about the construct and implications of the provisions of the determination.
• The Joint Bodies again wrote to the Assistant Treasurer on 9 August 2024 to advise that proposed changes to the start date had not alleviated their concerns with the Determination and the significant compliance burdens and uncertainties on small tax professional businesses.
• These stakeholders continued to call for it to be withdrawn or disallowed and took out a full-page advertisement condemning the regulations on 5 September and wrote the Prime Minister.
• A vote on the disallowance motion, moved by Senator Dean Smith on 1 0 September, was negatived in a tied 31-31 vote in the Senate. Crossbenchers David Pocock and Lidia Thorpe, Labor and the Greens voted against disallowance.
• In a one-minute statement on the disallowance motion, the Government admitted further changes and public consultation would be required and sought to delay it.
• The new legislative power used by the Assistant Treasurer to make the Determination was part of Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 which was passed in late 2023 as part of a deal with the Greens to ensure the passage of Labor’s franking credit reforms. Senator Barbara Pocock announced at the time that the Greens had secured the relevant amendments, and the Determination would follow.

The Coalition will seek to disallow the Albanese Labor Government’s latest move to burden tax practitioners with unnecessary and unrealistic red tape.

The new obligations are far-reaching, poorly drafted and potentially impossible for thousands of small tax practitioners to comply with.

This will drive up costs for Australians and small businesses who rely on and trust tax professionals to help manage their financial affairs.

These clients are individuals and small businesses like young professionals, retirees and tradies – the impacts could span millions of Australians, during a cost-of-living crisis.

Labor’s obsession with piling on red tape creates a compliance burden that is ultimately passed on through additional costs to clients.

These impacts are why adequate consultation, good communication and quantification of regulatory impact are so important. The Albanese Government has failed all three tests with this chaotic process and left thousands of local accountants and bookkeepers reeling.

Labor’s “Tax Agent Services (Code of Professional Conduct) Determination 2024” is beset with a barrage of problems:

•Minimal or no consultation.

•Unrealistic commencement timeframes and no regulator guidance.

•Retrospectivity, with a requirement to consider matters as far back as 1 July 2022.

•A disproportionate impact on small practices and sole practitioners.

•A new requirement to report to clients on any matter that could significantly influence a decision of a client to engage with them, which could include health and mental health issues.

•A new requirement to report to clients about ongoing investigations before there has been an outcome.
• Inconsistent obligations, including a duty to ‘dob in’ clients despite an existing obligation not to disclose confidential client information without the client’s permission.

This disastrous process is a sign of things to come under a Labor-Greens minority government. The Assistant Treasurer’s promises to back financial services professionals fell apart as soon as he cut a deal with the Greens to legislate Labor’s broken promise to raise taxes from franking credits.
Shadow Treasurer Angus Taylor said only a Coalition Government will put an end to Labor’s war on financial services professionals.

“A strong economy with thriving small businesses, informed consumers, higher home ownership, and better retirement outcomes require strong advice networks. Yet Labor is layering red tape upon red tape on finance professionals that just drive up costs for consumers. “This isn’t the right approach in a cost-of-living and cost-of-doing-business crisis. Local accountants and bookkeepers have been blindsided by this new red tape yet Labor has refused to listen to community feedback.

“Australian families and small businesses are paying the price of Labor’s failure to manage the economy and failure to listen.”
Shadow Assistant Treasurer and Shadow Minister for Financial Services Luke Howarth said these attacks from the Assistant Treasurer are nothing new.

“Rushed and botched regulation with a lack of meaningful consultation has come to be expected from this Government.

The Albanese Labor Government’s silence and inaction on the Consumer Data Right (CDR) is holding back this crucial cost of living relief and competition initiative.

After fourteen months of neglecting a key part of his portfolio, Assistant Treasurer Stephen Jones will finally break his silence at an event on Friday billed as his “first public remarks on CDR since June 2023”.

If the Assistant Treasurer rolls out more of the same platitudes about doing “the work to get it right” but again refuses to progress any of that work, the Albanese Government has effectively abandoned the CDR and failed the consumers and small businesses who stand to benefit from it.

Banks and energy providers have made a significant investment in the CDR – an investment which has the potential to set Australia’s digital economy up for the next century. However, this investment must be coupled with strong leadership from the Government and the support of the responsible minister.

Instead, the Albanese Government’s record on the CDR is a litany of stalled or abandoned projects led by a minister who is simply not interested:

•Expansions to insurance, superannuation and telecommunications have been abandoned.
•The Government’s own “action initiation” legislation to expand its functionality has languished in Parliament since its introduction in November 2022.
•The non-bank lending sector has been left in regulatory limbo with rules to expand CDR to include them stalled since August 2023.
•A promised education campaign to help consumers to easily identify CDR‑enabled providers, products and services never eventuated.
•The most recent consultations on improving the CDR and phasing out screen scraping have not progressed since August 2023.
•No new consultations on improving the CDR since August 2023.

In his June 2023 speech, the Assistant Treasurer said “right now, you can use your CDR data to get a better deal on your credit card, find a cheaper mortgage, and understand your energy usage” and that “an extensive architecture has been built, designed to expand and scale out.”

Fully aware of the benefits CDR can provide, the Labor Government’s failure to prioritise, support and scale it is compounding Australia’s cost of living crisis and sticky, home grown inflation.

Shadow Treasurer Angus Taylor said this is just another example that Labor’s competition agenda is more about spin than substance.

“With quarterly inflation rising again, it is baffling that the Labor Government isn’t using every lever it can to bring cost of living down.

“The Coalition implemented the CDR and since coming into Government, Labor has completely botched the roll out of a program its own Ministers’ described as a ‘game changer.’
“Australian consumers are paying the price for Labor’s lack of leadership.”

Shadow Assistant Treasurer and Shadow Minister for Financial Services said Labor’s inaction on CDR is yet another broken promise.

“Over the last two years the Albanese Government has pumped the brakes on its rollout and stalled its progress without explanation, creating regulatory uncertainty across the financial services sector.

“There is no leadership or plan from the Albanese Government and the ecosystem of innovative businesses supporting the CDR is suffering as a result.”

Shadow Assistant Minister for Treasury, Charities, and Competition, Senator Dean Smith said the Government’s delay in enacting CDR Legislation is denying Australian consumers the benefits of enhanced competition in the banking and energy sectors.

“The Coalition has forced the CDR back on the legislative agenda, and swift passage of the legislation next week will be a step towards improved competition outcomes for the economy at a time where Australia’s competition landscape is languishing.

“Australian consumers are paying a high price for Labor’s inaction and their delay is further proof that this Government fails to understand the levers that will drive improved productivity, bring down cost of living pressures, and improve living standards.”