Trevor Evans (Brisbane, Liberal Party) Share this | Hansard source

I rise to speak in favour of the Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017. These laws come at a critical stage for the federal government as we work to reduce taxes for small business and as we continue to focus on the important priority of budget repair following those years of growing Labor debts and deficits.

I was unfortunate enough to hear the last speaker on this bill, the Labor member for Whitlam, before question time today. I imagine that businesspeople, especially small businesspeople, would not have known whether to laugh, cry or shudder at his confusion between business turnover and profit. I am not sure, either, whether that was deliberate or inadvertent confusion on his part. But we do know that most of those on the opposition side of this chamber have never had a background in small business.

And on the specific topic of multinational tax avoidance, the member for Whitlam and all Labor members who are speaking on this bill are trying to make a lot of noise here as a distraction, because the fact is that when in government during those Rudd-Gillard-Rudd years, they did absolutely nothing about multinational tax avoidance.

This government has already achieved $2 billion of tax clawed back from multinationals through our work to date on the subject. And here we are now, with our second tranche of measures—$20 billion of budget repair by this government so far in gross terms and counting. It is important to note that about two-thirds of that budget repair has come from eliminating waste and wasteful spending. But when it comes to the one-third of our budget repair efforts that look at tax revenues, it is important, for both proper governance and community support, that we ensure that existing taxes are fairly applied and properly enforced as they were intended when those tax laws were passed by this parliament. The last thing that we want, when budgets are tight and taxpayers feel pressured, is to let some big taxpayers shirk their responsibilities, leaving other honest taxpayers to shoulder an unfairly high burden. I will return to this point again and again. This government's work to date is already paying dividends—$2 billion of additional taxes raised because of the good steps we have already taken in combating multinational tax avoidance. Now, we are here to do more when it comes to combating multinational tax avoidance and diverted profits.

I held another round of mobile offices in every suburb of my electorate over the last fortnight, and can I say that people are attuned to the way that the world is changing and the newfound capacity to use new technologies and different legal models and different jurisdictions around the world to evade local laws. It is a line of reasoning that applies equally to tax, to product safety and warranties, to intellectual property, to labour laws, to the trade in goods and services—you name it. Australia needs to keep its tax laws up to date as the world changes. Indeed, in cases like this where international cooperation is necessary to solve a problem and ensure enforcement of and compliance with tax laws around the world, Australia should be at the leading edge of efforts and international cooperation—and, with this new bill before the parliament, we are.

These laws mean that Australia is at the front of the pack, leading the world in combating the increased ability in this new world to shift profits and avoid paying a fair share of taxes. When I talk to locals about multinational tax avoidance, they talk about it in terms of lost taxes that could have been spent in areas like health and education. They talk about in terms of being able to afford the things we need to support local jobs and maintain our lifestyle and grow our economy. They talk about not disadvantaging our local small businesses who cannot and do not attempt to avoid paying their fair share. They talk about how better enforcement will enable us to afford the benefits of lower taxes and better services for those small businesses who are at the centre of our local economy and most need it. That is why the integrity of our taxation system matters for the people in my electorate of Brisbane. By their very nature, these bills go hand in hand with our plan to grow the economy.

In my maiden speech I noted that the Liberal Party was founded on the notion that the small-business middle class needs a strong voice. In Robert Menzies' most famous address, 'The forgotten people', he said that the rich and powerful 'are as a rule able to protect themselves'. He said he wanted to represent 'shopkeepers, skilled artisans, professional men and women, farmers and so on'. We want small businesses locally to grow into big businesses and to create the jobs and the opportunities that Australians critically need. My family, coming as they do from small business, are naturally suspicious of concentrated power, whether that is found in the clumsy power of central governments, the institutional influence of big trade unions or the market power of big multinational businesses. I believe the more powerful you are, the more responsibility you have to wield your power in a way that is true to your origins and that benefits and protects the little guys coming from the same place where you started. This is yet another area where some of the world's biggest businesses, who have enjoyed the fruits of Australia's economy, have an obligation to share in the responsibility of contributing back. They must accept and abide by our tax laws to ensure a level playing field for all.

One important part of this government's measures to tackle multinational tax avoidance will see an increase in administrative penalties for significant global entities. This increase in the penalties will help ensure that these entities do not opt out of their reporting obligations. It means that, from 1 July this year, increased administrative penalties can be applied by the Commissioner of Taxation to a significant global entity—that is, an entity with annual global income of $1 billion or more—who fails to adhere to tax reporting obligations. The maximum penalty will be increased 100 times over for these entities where they fail to lodge tax documents on time or take reasonable care when making statements to the ATO.

By increasing these penalties, we are simply encouraging businesses to comply with our taxation standards. Once enacted, the maximum administrative penalty for significant global entities who fail to comply will increase from about $5,000 now—a piddly fine that would not deter most people in cases of multinational tax avoidance—to a more serious deterrent fine of over half a million dollars. Penalties will be also be more harsh for these entities if they make false and misleading statements to the ATO. By increasing the administrative penalties, the penalty amounts will be more commensurate with their turnover and will act as an incentive for these global multinationals to do the right thing.

The Diverted Profits Tax Bill is an anti-avoidance measure which will help ensure that any money made by multinationals which is subject to Australian tax will be payable to the ATO. When implemented, these laws will give the Commissioner of Taxation greater powers to recoup legitimate tax dollars that have been taken offshore. The legislation will commence on 1 July this year, and it is expected to raise $100 million in revenue a year from the 2018-19 financial year. It provides a powerful new tool for the ATO to tackle contrived arrangements and uncooperative taxpayers and it will reinforce Australia's position as having some of the toughest laws in the world to combat multinational tax avoidance.

If the commissioner determines that profits are being diverted, a penalty rate at 40 per cent will be applied, and it will need to be paid within 21 days. The liability can be adjusted by mutual agreement during a 12-month review period, but the taxpayer cannot appeal the assessment until the end of the review period, after which, generally, no new information would be considered. By making it easier for the commissioner to apply Australia's anti-avoidance provisions and applying that 40 per cent penalty rate of tax, which cannot be appealed until the end of the review period, this will encourage greater compliance by multinationals, encourage greater openness with the tax commissioner and allow for the speedier resolution of disputes.

We know these laws will work, because, as I mentioned earlier, already the Turnbull government's efforts in this place are paying dividends. Around $2 billion of tax is expected to be clawed back this financial year under this government's earlier measures cracking down on multinational tax avoidance. That is $2 billion that would have otherwise not have been able to fund more schools, hospitals, pensions and government services. It is $2 billion of tax burden that would have fallen unfairly otherwise on the shoulders of other taxpayers, such as the small businesses at the heart of our economy. The $2 billion in tax liabilities from multinationals is expected to come from assessments relating to just seven audits of large multinational companies in the energy, resources and e-commerce sectors. This is further proof that the implementation of the government's multinational anti-avoidance legislation and the recently established Tax Avoidance Taskforce within the ATO are effectively dealing with noncompliance behaviour of multinationals in Australia.

While it is clear that the opposition love to talk about the big end of town, it seems to me that it is this government that is actively working to make sure multinationals pay their fair share, while the other mob appear to be busy running around running interference to distract from their big deals with big businesses and big unions to cut penalty rates. Of course, we know that the opposition voted previously against the last set of multinational tax avoidance measures presented in this place—just one more sign of the hypocrisy of today's Labor Party. They kick and scream, fight tooth and nail and deliberately mischaracterise tax cuts aimed predominantly at small business, yet they did not back the last measures to penalise the biggest businesses for tax avoidance. I am not sure if it is deliberate or inadvertent hypocrisy, but it is a worrying sign, certainly, that the shadow Assistant Treasurer had trouble last week working out the difference between custodial and beneficial shareholders. Hopefully, they will not be missing in action this time around.

In conclusion, it is clear through our major successes already achieved in this area that the Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 is necessary if we want to keep Australia up to date as the world changes. The community in Brisbane wants these laws. No-one in Brisbane works harder than the small business owners and operators. They are paying their fair share. In fact, I would suggest they are paying more than their fair share. This bill helps to decrease the pressure of their tax burden. We are supporting their ability to invest in their businesses, to grow their businesses, so they can turn their mind to putting on their next employee—a job for a local in Brisbane—improving our local economy. That is what this government is all about. Through greater powers and greater penalties we are simultaneously ensuring integrity in our tax system and continuing our important work on budget repair. I commend this bill to the House.

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