Coalition Senators' Dissenting Report

Background

1.1Coalition Senators note that the cost-of-living crisis and its associated economic challenges have put unprecedented pressure on Australian households and the charitable organisations that support them.

1.2In particular, more Australians are experiencing food insecurity than ever before, many of them for the first time, and more severely.

1.3The Foodbank Hunger Report 2024 found 2 million, or 19 per cent, of Australian households experienced severe food insecurity in the past 12 months. This was evidenced by the increased demand for food relief experienced by Foodbanks across the country.[1]

1.4Sixty-three per cent of respondents to a survey linked to The Salvation Army Australia’s Red Shield Report 2024 had skipped meals and 45 per cent had to choose between paying for housing or buying food. Most confronting, 27 per cent had consumed expired or spoiled food.[2]

1.5Cost of living continues to be the main contributor to food insecurity, with increased living expenses identified as a factor by 82 per cent of food insecure households.[3]

1.6This food insecurity trend is occurring at a time of extensive food wastage, with more than 7.6 million tonnes of food dumped each year, much of it perfectly edible, because it is more commercially viable than donating it.[4]

1.7A common theme throughout both the submissions and public hearing evidence was the growing urgency for a food donation tax incentive of the type featured in the bill, as well as frustration over a lack of progress in this area.

1.8It has been a year since the Australian Government-chaired House of Representatives Standing Committee on Agriculture released its report, Australian Food Story: Feeding the Nation and Beyond, which recommended the introduction of a food donation tax incentive.

1.9In May, the Second Interim Report of the Senate Select Committee on the Cost of Living recommended the Australian Government consider ways to encourage philanthropic activity, including through tax incentives such as the one subsequently introduced in this bill.[5] In making the recommendation in its final report that the Senate pass the bill, the committee observed:

The sector is crying out for help. However, as is the case for the other recommendations from the Second Interim Report, the Labor Government still has not responded to the committee’s recommendations that it consider tax incentives, deductions and other methods to encourage charitable giving of money, goods and services. Of all the committee’s recommendations, these are among the most urgent, given people are foregoing food because they do not have enough money to buy groceries and eat.[6]

1.10The Australian Government has similarly ignored Australian charities and businesses. The Food Relief Sector confirmed a letter of support for a tax incentive signed by more than 60 food industry organisations and companies was sent to the Treasurer, The Hon Jim Chalmers MP, in 2023 and remains unanswered.The sector also advocated for the proposal in its Pre-Budget submissions in 2023 and 2024.[7] Despite this demonstrated support and ongoing advocacy, the Australian Government has turned a blind eye.

1.11Asked about the Australian Government’s failure to act, Ms Tanya Barden of the Australian Food and Grocery Council noted in evidence:

I think it's a very good question as to why the parliament hasn't passed something like this to date, and I think it really needs to have a good hard look at itself as to why not. I think it's an easy kind of win and an opportunity that should really have the support of all parties across the parliament, particularly in the current cost-of-living crisis.[8]

Overwhelming support for the bill

1.12The bill, or a tax incentive of the type featured in the bill, was endorsed by the vast majority of submitters as well as witnesses at the public hearing.

1.13The Australian Food and Grocery Council noted the bill’s significant potential to deliver change:

The bill is a game-changer for the food relief sector. It has the power to significantly change how food and grocery manufacturers participate in food relief by overcoming cost barriers to establish reliable, consistent, and effective supply chains for food relief charities.[9]

1.14The bill was described by UnitingCare Australia as ‘…an important measure in increasing food donation activities to registered food charities’,[10] while the St Vincent de Paul Society National Council highlighted the initiative’s ability to reduce pressure on the charity sector:

By incentivising food donations, we not only increase food supply to those who need it, we also free up more emergency relief resources to those who need help with other necessities, such as housing, medicine, transport and education.[11]

1.15National Farmers Federation expressed the relief of many that a vehicle for the tax incentive had finally been delivered, saying, ‘it is welcome to see headway made on this sensible policy lever’.[12]

1.16Collective Hope Community Services referenced the benefits of the bill for primary producers and regional economies during what is also a cost of doing business crisis:

…it would not only help many Australians in need but also reduce food loss and waste; help stimulate regional economies; acknowledge the generosity of farmers and growers; and support small and medium-sized businesses during a particularly challenging economic period.[13]

1.17This was echoed by AUSVEG:

Notably, the tax incentive will particularly benefit smaller farmers who may struggle to absorb the costs associated with surplus food and are more likely to resort to wasteful disposal.[14]

1.18Significantly, the small number of witnesses who opposed the bill in their submissions all changed their position during the course of the public hearing. Dr Rebecca Lindberg, for example, gave evidence that:

I have been listening in to the other evidence that's been given. I will concede that perhaps some of my fears around multinationals or retailers using these tax incentives have been allayed this morning. I'm not a policymaker, economist or tax expert, so I think some of the detail that has been shared has given me confidence...[15]

1.19On the matter of safeguards, KPMG Australia emphasised its support for the integrity measures contained in the bill:

We are supportive of the core features of the Bill, including the integrity measures, and consider that the legislative framework provides a good balance to incentivise food donations activities while also having appropriate safeguards to manage key integrity risks.[16]

1.20As has already been noted, a food donation tax incentive was a recommendation of the House of Representatives Standing Committee on Agriculture Report, Australian Food Story: Feeding the Nation and Beyond, released in November 2023.

1.21In its final report released today, the Senate Cost of Living Committee recommended the Australian Government support the bill, noting:

It is imperative that charities and not-for-profits have sufficient resources to meet demand, in a way that does not contribute to inflation. Therefore, the committee recommends that the Australian Government support the passage of the bill in the Parliament.[17]

Proposed enhancements to the bill

1.22Despite the extensive support for the bill already outlined, submitters identified a common group of suggested enhancements.

1.23Under the bill as drafted, businesses with turnover of $50 million or more qualify for a tax offset of 30 per cent of their donation costs, those with a turnover of $20 million or more qualify for a 40 per cent offset, and those with a turnover of less than $20 million qualify for 45 per cent offset.

1.24More than 30 submissions received by the committee argued that the $50 million threshold is too low and recommended increasing it to $250 million.

1.25KPMG Australia noted that this change would align better with the Australian Taxation Office’s definition of medium-sized businesses and enable more companies to benefit from the higher offset rate of 40 per cent:

Practically, this means that for many companies that can only claim the 30 percent offset, there may be minimal incentive to undertake food donations activities. As such, consideration should be given to increasing the $50 million threshold to allow for all businesses classified as medium sized businesses (defined by the ATO as turnover of between $10 million and $250 million) to be eligible for the 40 percent offset rate. This is particularly the case having regard to the fact that the test looks at turnover (i.e. revenue) rather than profit.[18]

1.26AUSVEG also highlighted the high turnover and low-profit margins that often characterise food production, with Ms Lucy Gregg, General Manager—Public Affairs, giving evidence that:

Vegetable production can very much be high volume, low margins, so, if it didn’t go above $50 million, that would, once again, rule out a significant number of our larger growers.[19]

1.27The late submission made by CPA Australia similarly supported broadening eligibility for the 40 per cent tax offset, but differed in that it argued for the removal of the 30 per cent tax offset tier and a top cap entirely. All companies with a turnover of $20 million or more would therefore be entitled to a 45 per cent tax offset.[20] This aligns with the original model outlined by KPMG Australia in its 2020 report, A National Food Waste Tax Incentive.[21]

1.28However, KMPG qualified its recommendation in the context of the bill, noting in its submission:

Given the proposal is in a pilot phase, we acknowledge that providing an incentive 40 percent offset for all companies above a $20 million threshold (as recommended in the KPMG report) may not be feasible in the current fiscal environment.[22]

1.29Considering the present economic climate, KPMG Australia and the Food Relief Sector also supported the $5 million offset quantum in the bill.[23]

1.30In excess of 40 submitters, including National Farmers Federation and AUSVEG, emphasised that limiting donors to constitutional corporations, as the bill currently does, excludes a significant portion of potential donors. They argued that the eligible cohort should be expanded to include other structures, particularly partnerships and trusts.[24]

1.31The Food Relief Sector observed:

… many small businesses, including primary producers and others in the agricultural sector, commonly operate their businesses through different structures, notably partnerships and trusts. As currently drafted, these entities will be ineligible to claim the offset which we believe is contrary to the spirit of the Bill.[25]

1.32The Chief Operating Officer of Foodbank Australia, Ms Sarah Pennell, again stressed the limitations of the current wording of the bill, giving evidence that ‘…we would potentially be excluding the very people we want to target’.[26]

1.33Submitters also advocated for the inclusion of entities registered as Public Benevolent Institutions in the definition of a ‘Food Relief Charity’ for the purposes of the bill.[27]

1.34The Food Relief Sector, which joined UnitingCare, St Vincent de Paul Society and the Australian Food and Grocery Council, among others, stressed:

There are many registered charities that play active roles in trying to reduce food waste and food hunger and not all these charities fall within item 3. [Item 3 refers to a classification under the Australian Charities and Not-for-profits Commission Act 2012][28]

1.35AUSVEG noted that ‘this expansion will help facilitate greater food donations to charitable organisations … ensuring that more organisations can participate in this important initiative’.[29]

1.36Largely led by members of the charity sector, including UnitingCare and the Salvation Army Australia, some submitters proposed removing the bill’s three-year sunsetting provisions, with a view to the tax incentive continuing indefinitely.[30]

1.37Senator Dean Smith addressed this during the public hearing, questioning KPMG Australia on the timeframe and review process featured in the bill:

Senator Smith: But do you think the sunsetting arrangement and the review mechanism support the fiscal responsibility of the initiative?

Ms Aley: We do. I think it's really crucial to look at that three-year view. How can government pilot such an incentive and, through that piloting, understand the uptake and the demand and also the way in which businesses have interacted with the incentive?[31]

1.38Ms Jennifer Kirkaldy, Salvation Army Australia’s General Manager of Policy and Advocacy, gave evidence that, while her organisation did not feel the sunsetting provision was needed, it did not want to see progress of the bill jeopardised on this basis:

We would not be wanting to enter into an either/or, though. There is nothing more important than making sure that everyone in Australia has their basic needs met. No-one should be going to bed hungry.[32]

Supermarket access to the Tax Incentive

1.39Concerns were raised during the public hearing about use of the tax incentive contained in the bill by the major supermarkets. These concerns rest on the absence of an earnings cap for eligible participants in the bill as currently drafted and the theoretical ability of supermarkets to utilise the offset for the considerable food donation activities they already undertake.

1.40The bill has been designed with primary producers and their associated service providers in mind and was never intended to cater to the major supermarkets.

1.41Representatives of the major supermarkets made it clear from the outset that, while they supported the bill on the basis it would encourage food donations and reduce food waste, they would not take up the tax incentive.

1.42In an email to the committee dated 4 November 2024, Woolworths Group reaffirmed its in principle support, but confirmed that ‘the tax incentive is not something we would take up’.[33]

1.43A similar commitment was received in a letter to the committee from Coles Australia dated 31 October 2024, in which it outlined:

…we are aware that queries had been raised as to whether the major supermarkets would be eligible for these tax incentives, and I can advise that this is not something Coles would seek to utilise.[34]

Coalition senators’ findings

1.44Coalition senators find that there is an urgent need for a food donation tax incentive that both encourages donations to food relief charities and reduces food wastage.

1.45The Albanese Government has disregarded years of advocacy for a food donation tax incentive by the food relief sector and businesses, and numerous recommendations by parliamentary committees, including those it chairs.

1.46In failing to implement its own legislation to deliver this initiative, the Australian Government is failing struggling Australian households, the charity sector and primary producers.

1.47The Australian Government has also ignored the recommendations of the House of Representatives Standing Committee on Agriculture, which it chairs and dominates, with Labor members including Ms Meryl Swanson MP, Mr Matt Burnell MP, Dr Mike Freelander MP, Mr Brian Mitchell MP, and Mrs Fiona Phillips MP.

1.48The bill presents a targeted and effective solution during the cost-of-living crisis. It, and what it seeks to achieve, enjoys widespread support among relevant stakeholders and the Australian community.

1.49The bill remains a time-limited initiative to address a specific set of problems and sunsetting provisions and a review mechanism remain appropriate.

1.50There is merit in several of the suggested amendments to the bill, including:

extending eligibility to access the tax incentive to partnerships and trusts;

including Public Benevolent Institutions in the definition of a “Food Relief Charity”; and

subject to advice on the budgetary implications of doing so, increasing the $50 million threshold to $250 million to capture a wider range of potential donors.

1.51The Coalition will formally consider these enhancements to the bill.

1.52No evidence was presented to the committee to support claims that the bill intends to, or would, preference large food businesses or food relief organisations over smaller operators.

1.53Despite undertakings received from Woolworths Group and Coles Australia that they would not access the tax incentive, some concerns remain that the bill as drafted leaves the way open for abuse by major supermarkets.

1.54Coalition Senators acknowledge these concerns and take the view that the bill may be strengthened, and community expectations better met, by considering an amendment to the bill excluding signatories to the Mandatory Food and Grocery Code from utilising the tax incentive. This has the benefit of also capturing other large or emerging Australian supermarket operators moving forward.

1.55Strong consideration be given to proposed enhancements to the bill, with a view to increasing both its efficacy and cost efficiency, including:

extending eligibility to access the tax incentive to partnerships and trusts;

incorporating Public Benevolent Institutions within the definition of a “Food Relief Charity”; and

subject to advice on the budgetary implications of doing so, increasing the $50 million threshold to $250 million to capture a wider range of potential donors.

1.56An amendment to the bill be introduced prior to debate that prevents signatories to the Mandatory Food and Grocery Code from accessing the tax incentive.

1.57The Treasury request that the Australian Taxation Office reports any known compliance or integrity issues connected with the tax incentive on a regular basis.

1.58The Australian Government release the advice on the bill provided by the Treasury to the Assistant Minister for Competition, Charities and the Treasury.

1.59Having failed to endorse the bill, the Australian Government bring forward its own, alternative plan to support donations to food relief charities and reduce food waste in Australia.

Footnotes

[1]Foodbank Australia and Ipsos Public Affairs, Foodbank Hunger Report 2024, October 2024, p. 3.

[2]C. Russell, S. Verrelli and E. Taylor, The Red Shield Report 2024: The Cost of Living Squeeze, 2024, pp. 23–24.

[3]Foodbank Australia and Ipsos Public Affairs, Foodbank Hunger Report 2024, October 2024, p. 3.

[4]Ms Brianna Casey, Chief Executive Officer, Foodbank Australia, Proof Committee Hansard, 23 October 2024, p. 1.

[5]Senate Select Committee on the Cost of Living, Second Interim Report, May 2024, p. 71.

[6]See Senate Select Committee on the Cost of Living, Paying the Price: The Cost of a Crisis on Australians' Standards of Living, November 2024, Chapter 5.

[7]Food Relief Sector, Submission 43, p. 1.

[8]Ms Tanya Barden, Chief Executive Officer, Australian Food and Grocery Council, Proof Committee Hansard, 23 October 2024, p. 19.

[9]Australian Food and Grocery Council, Submission 6, p. 3.

[10]UnitingCare Australia, Submission 5, p. 3.

[11]St Vincent de Paul Society National Council, Submission 14, p. 2.

[12]National Farmers Federation, Submission 42, p. 4.

[13]Collective Hope Community Services, Submission 25, p. 1.

[14]AUSVEG, Submission 11, p. 7.

[15]Dr Rebecca Lindberg, Private capacity, Proof Committee Hansard, 23 October 2024, p. 15.

[16]KPMG, Submission 10, p. 3.

[17]See Senate Select Committee on the Cost of Living, Paying the Price: The Cost of a Crisis on Australians' Standards of Living, November 2024, Chapter 5.

[18]KPMG, Submission 10, pp. 6–7.

[19]Ms Lucy Gregg, General Manager—Public Affairs, AUSVEG, Proof Committee Hansard, 23 October 2024, p. 20.

[20]CPA Australia, Submission 63, pp. 1 & 3.

[21]KPMG, A National Food Waste Tax Incentive: Boosting Food Relief through Australia’s Tax System, September 2020, p. 3.

[22]KPMG, Submission 10, p. 7.

[23]KPMG, Submission 10, p. 6; Food Relief Sector, Submission 43, p. 2.

[24]AUSVEG, Submission 11, p. 7; National Farmers Federation, Submission 42, p. 4.

[25]Food Relief Sector, Submission 43, p. 2.

[26]Ms Sarah Pennell, Chief Operating Officer, Foodbank Australia, Proof Committee Hansard, 23 October 2024, p. 5.

[27]KPMG, Submission 10, p. 6; AUSVEG, Submission 11, p. 5; 5Fold, Submission 12, p. 1; Hillside Church Community Outreach, Submission 13, p. 1; St Vincent de Paul Society, Submission 14, p. 2; End Food Waste Australia, Submission 16, p. 2; Takerway, Submission 17, p. 1; Launceston City Mission, Submission 18, p. 2; Food Industry Engineering, Submission 19, p. 1; SunRice Group, Submission 20, p. 1; T-Provenance Pty Ltd, Submission 21, p. 2; Food is Free Inc, Submission 22, p. 2; Collective Hope Community Services, Submission 25, p. 2; Community Health Onkaparinga, Submission 26, p. 1; Canberra City Care, Submission 27, p. 1; Dr Stacey Tabert, Submission 28, p. 1; Mr Tim Brooks, Submission 29, p. 1; Australian Institute of Food, Science and Technology, Submission 30, p. 2; Ms Jen Anderson, Submission 31, p. 1; Manning Valley Neighbourhood Services Inc, Submission 33, p. 1; Simplot Australia, Submission 34, p. 1; Tetra Pak, Submission 36, p. 1; Eat Well Tasmania, Submission 38, p. 2; Carbal Medical Services, Submission 39, p. 1; Food & Fibre Gippsland, Submission 40, p. 1; National Farmers Federation, Submission 42, p. 4; Food Relief Sector, Submission 43, p. 2; Ms Racheal Stanley, Submission 45, p. 1; Margaret River Community Centre, Submission 46, p. 1; Brunswick Neighbourhood House, Submission 47, p. 1; Nestle Oceania, Submission 48, p. 1; The Mana Project – Word of Life Christian Church, Submission 49, p. 1; Port Douglas Community Service Network Inc, Submission 50, p. 1; VCS Inc, Submission 52, p. 1; AUSVEG Vic, Submission 52, p. 2; Name Withheld, Submission 53, p. 1; Name Withheld, Submission 54, p. 1; Name Withheld, Submission 55, p. 1; Name Withheld, Submission 65, p. 1; Name Withheld, Submission 57, p. 1; and Name Withheld, Submission 58, p. 1.

[28]Food Relief Sector, Submission 43, p. 2.

[29]AUSVEG, Submission 11, p. 7.

[30]The Salvation Army, Submission 4, p. 5; UnitingCare Australia, Submission 5, p. 3.

[31]Ms Georgie Aley, Partner, Consulting Lead, Customer Products and Industrial Markets, KPMG Australia, Proof Committee Hansard, 23 October 2024, p. 10.

[32]Ms Jennifer Kirkaldy, General Manager, Policy and Advocacy, The Salvation Army, Proof Committee Hansard, 23 October 2024, p. 24.

[33]Correspondence from Woolworths (received 4 November 2024), p. 1.

[34]Correspondence from Coles Group to Senator Dean Smith, 31 October 2024 (received 4 November 2024), p. 1.