Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Hansard source

I have heard the speakers on the government side talk about this Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 as the great step forward in combating multinational tax avoidance. I have heard them brag about the government's performance over the last four years.

I really wish it were true. The community is well ahead of the government on this. The community has an expectation that our biggest companies start paying the tax that they owe us. This government, for four years, has stepped away from combating multinational tax avoidance and wound back laws, cut staff to the ATO and weakened Australia's capacity to collect tax from our biggest companies.

Today, in their fourth year—they are not approaching their first budget, they are approaching their fourth budget—they have come into this parliament with a bill which, in its totality, will generate—on its own figures—$200 million over the forwards. Anybody out there who has been reading or paying attention to the number of large companies in Australia that do not pay any tax at all will wonder how $200 million is the figure for the big centrepiece of combating multinational tax avoidance. Schedule 1 is $200 million. Schedules 2 and 3—asterisks—are for increasing administrative penalties and updating transfer-pricing guidelines. Schedule 1, diverted profits tax, is the one that generates the big numbers: $200 million.

Labor's policy on the same matter, diverted profits tax, would have generated $1.6 billion over the forwards. This one: $200 million. The centrepiece of this government's combating multinational tax avoidance bill is $200 million over the forwards. What a very sad state of affairs that is!

We heard today the Treasurer, in question time, at the dispatch box, shouting proudly about the government's tax collection measures. He was referring to a $3.7 billion revenue gain as if it was a change in law. Actually, it was not. That $3.7 billion—and I am glad to see it being collected—was actually caused by the government's decision to replace some of the staff at the tax office that they had cut in the previous years. This government, in its first three years, managed to cut 3,000 staff at the ATO. It was an enormous cut in a government department and an incredible loss of knowledge. The public sector is a really interesting thing. People do their job and, almost as a by-product of doing their job, they develop relationships and an understanding of businesses and of the sector, and a knowledge of what works and does not work. They become this great resource of knowledge. When you make savage cuts to a department, you do not just lose its capacity to do what needs to be done today, which is to pursue companies that are avoiding tax, but you also lose the capacity of that organisation to think and to contribute to policy debate. You lose people's relationships and the connections that help them do their job well. You do damage which is impossible to replace in the short to medium term. It cannot be replaced. Every time this government gets out the knife and cuts more away of our public sector, we lose something incredibly valuable, and we lost that at the tax office.

Now, of course, we have the government in the last budget—the budget of 2016—putting back $678 million to employ not 3,000 staff but 1,300, some of which are already there, and 390 new specialised officers. That replacement of those staff is estimated to generate $3.7 billion in revenue—by replacing staff that they cut before. What would those 3,000 staff have done? We have had a Treasurer walk in here and brag that he is going to generate revenue by putting back staff that he cut. What an achievement! It is the fourth year of the government—destroy it in the first three years and then jump up and down and ask for applause when you put some of it back. What we actually have today is a government that has repaired some of the damage it did—not all of it, but some it. Some of the damage from those cuts cannot be repaired. What we have today is a government that has walked into this House with its major, multinational tax avoidance package that will generate $200 million over the forward estimates.

I want to talk a little bit more about the ATO's capacity—those 3,000 job losses undermining the enforcement capacity and the loss of knowledge. In 2014, the ATO Second Commissioner, Neil Olesen, admitted that for every dollar spent on staffing resources they would yield six in revenue collected. In 2015, the coalition ridiculed Labor's PBO costed proposal for additional ATO staffing as a way of clawing back revenue. They said it was not true. Now, of course, they demonstrate by their own figures that it is true, and it always was—by the ATO second commissioner's own figures, for every dollar you spend on staffing resources, if you spend them the right way, you can yield six. What a return that is. What a savage cut those 3,000 positions were. You do not pay attention to this government's spin. They have a lot of spin. They have not much more than spin. It is like on a cycle—lots of action but no speed. The coalition's diverted profits tax will raise just $200 million over the forward estimates compared to Labor's plan, which would have been $1.6 billion over the forward estimates.

It is also worth looking at what else this government has done in terms of winding back the tax office's capacity to ensure that businesses pay. If the government were serious about getting tough on multinationals, they would do something serious about the one in three big companies that pay no tax. The most recent 2014-15 tax office transparency data shows that more than one in three large firms pay no tax at all, and 3,000 staff were cut from the ATO. This includes 109 companies that paid no tax, even though they reported more than $1 billion in total income. They paid no tax at all—109 companies with a total income of $1 billion.

The transparency data report, covering 1,904 companies, is only available because of Labor's tax transparency laws which passed the parliament in 2013 over the objections of the coalition. The coalition objected to these tax transparency laws. They certainly were not committed to anything to do with non-payment of tax back then. The Liberals and Nationals voted against those laws at the time and, a little while later, they joined with the Greens to water those laws down further, taking two-thirds of private companies out of the reporting net. They voted against Labor's transparency bill and then, when they got into government, they weakened it. The effect of that weakening is absolutely clear. If you look at the 2014-15 year and the previous year, the share of large firms paying no tax at all remained at 36 per cent. There was no change whatsoever as a result of this watering down of this law—none. Labor led the way on tackling multinational tax avoidance under the Gillard government against the blanket opposition of the coalition. While the coalition government has had to be dragged into action, over 3,000 jobs were slashed in the first three years, undermining the enforcement ability and losing institutional knowledge. What we have is a government that has not acted in any serious way over the last four years. They can come in here, jump up and down, and ask for credit for this bill, and we will support it because it is better than nothing, but, honestly, after four years, this is it—two hundred million dollars over the forward estimates when one in three large companies do not pay tax.

I want to quote then Prime Minister, Tony Abbott, back in 2015. This is an extraordinary quote:

So far the only idea they have come up with is to spend $100 million on the ATO to raise $1 billion . Well, next time they will be telling us to spend $1 billion on the ATO to raise $10 billion. That is the problem. All they can think of is spending more and taxing more. They just cannot help themselves. I actually think that deep down the Leader of the Opposition is better than that, and I would ask him to start demonstrating that now.

So, back in 2015, we were being bagged over the dispatch box because we said, 'You have to resource the tax office properly so that it can pursue these big businesses and raise more tax.' We were saying $100 million could raise $1 billion. The ATO representative said you could raise six for one. Now we have the Treasurer doing exactly that, replacing some of the staff that he cut, with $679 million to raise $3.7 million. When we suggested that in 2015, it was a terrible idea! At that time, the government were cutting the staff of the tax office. They changed their minds, and now they think it would be a good thing. They have promised to restore some of the tax office funding. That is an absolute admission of their failure in cutting it in the first place.

We have an interesting situation here. We have a government that is not only quite soft—I think that is the appropriate word—on combating international tax avoidance but also going after some of the most vulnerable people in Australia. They are cutting welfare payments; they are cutting family payments; they are cutting the energy supplement; they are reducing the pension for people who travel overseas for more than six months, unless they have been here for more than 35 years—you name it. They are reducing access to child care for the most disadvantaged, from two days to one. Across the board, at the lowest levels of economic strength, they have the knives out. They are cutting and cutting and cutting. We have heard today that there will be major cuts to some of our Federal Police. We know that they are in favour of the recent cuts to penalty rates which will hurt up to 700,000 of our lowest paid workers.

But, while the government are cutting and cutting and cutting away at the most vulnerable end, it does not really seem that their hearts are in ensuring that the biggest end of town contributes to this society in the way that we need them to, in the way that they should. You only have to look at the figures under their $50 billion tax cut to business, including to some of the biggest businesses in Australia and many international ones. This is a $50 billion tax handout to big business which, it is estimated, will increase household income by 0.1 per cent by the mid-2030s. This is a huge handout to big business that, all the figures show, will not actually provide a return to taxpayers, who will pay for that tax cut in lost tax revenue. Also, based on the latest figures, the estimate is that that $50 billion handout will cost this country $4 billion in interest.

So we have a government that, on one side, introduces a tax cut of $50 billion that will cost $4 billion in interest, and, on the other side, introduces its fabulous centrepiece to counter tax avoidance that generates $200 million over the forward years. What a difference that is. When you look at those figures, you would have to say that this is no more than a fig leaf. You have a government giving $50 billion in tax handouts, paying $4 billion in interest to get it and introducing measures to counter international tax avoidance by the biggest companies in the country and some of the biggest around the world that will generate $200 million. You have to assume that this is absolutely a fig leaf and nothing more.

I would be making a completely different contribution today if I thought the government were actually serious about this. But, again, look at the history. Do not listen to the spin; look at history. They have voted against, have argued against, every measure to combat tax avoidance that Labor introduced. They watered one down when they got into government. They cut 3,000 staff from the tax office without a qualm, without a word, as if the skill level and the work that the ATO do is not important. That is the actual history. And then they pick up a small part of a Labor policy that would have generated $1.6 billion, and water it down so it only generates $200 million over the forward years.

This is not a policy to combat tax avoidance. This is, at best, a fig leaf. I really urge the government, if it wants a genuine debate on restructuring the economy, if it wants a genuine debate on restructuring welfare, to look at the whole band of where the money is. You have to look at the biggest businesses and you have to go all the way through; you have to look at it all. You cannot just look at the most vulnerable people in society but give the biggest businesses in the world a free pass, and that is what you are doing. That is what you have been doing for four years—not one but four years of government. After four years, this is all you have got? You have got to be kidding.

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