Andrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

I move:

That this House:

(1) recognises that:

(a) the Government's failure to tackle multinational profit shifting in Australia;

(b) every dollar that is avoided by multinational companies must be paid for by Australian taxpayers and businesses, or by cutting services; and

(c) unfair tax arrangements distort investment decisions and put local companies at a disadvantage against international conglomerates;

(2) acknowledges:

(a) the $1.1 billion of multinational tax measures that the Government has handed back to large multinationals, including:

  (i) $280 million in reforms to the offshore banking unit regime;

  (ii) $113 million in legislative elements to improve tax compliance;

  (iii) $140 million from not proceeding with changes to rules applying to multiple entry consolidated groups; and

  (iv) $600 million from the abolition of section 25-90 of the Income Tax Assessment Act 1997;

(b) the Treasurer's laggard implementation of the new G20 reporting standard behind the group of 40 'early adopters';

(c) the $200 million and thousands of staff cuts from the Australian Taxation Office which severely limit its compliance and investigative power; and

(d) the significant gap between this Government's rhetoric and its actions when it comes to ensuring multinationals pay their fair share of tax; and

(3) calls on the Treasurer to bring the same zeal to stopping multinational tax avoidance that he brings to his budget cuts on Australia's least well off.

In the 1970s, Australian conservative governments notoriously lost between $3 billion and $6 billion in today's money, a huge share of revenue at the time, to domestic tax avoidance schemes involving thousands of Australian income earners. The revenue streamed away through loopholes which were eventually closed by two separate major tax changes. The second was following the Fraser-Howard government's public shaming by the Costigan royal commission.

The bottom-of-the-harbour schemes were one of the historic peaks of rent-seeking behaviour in the Australian economy and one of the historic troughs of effective administration of the public good. Paul Keating famously said that the economic opening of the 1980s 'despivved' the economy. It was exactly those tax dodgers and rent seekers who flourished under conservative economic policy in the 1950s, 1960s and 1970s that he had in mind.

Today we are talking about 'despivving' the global economy. Since the Abbott government has come to office it has handed $1.1 billion back to multinationals. These are multibillion dollar firms with multibillion dollar profits receiving multibillion dollar benefits under this government with no strings attached. The issue of base erosion and profit shifting has attracted significant attention. Even big firms themselves are concerned about it. In an interview with the Australian Financial Review, Rio Tinto chairman Jan du Plessis said, 'Too many multinationals are getting away with murder.' He also pointed out that 'tax regimes need to catch up with the consequences of globalisation.'

Martin Lock, formerly a senior official in the tax office, recently told Fairfax journalist Michael West:

Almost effortlessly, a new subsidiary, partnership or trust can be established in any favourable tax jurisdiction, including in a tax-treaty country …

This is a process known as treaty shopping. He goes on to argue:

… the multinational can even shift a parent company or subsidiary's tax residency by doing little more than flying the board members to a chosen tax-treaty country and holding a tax-deductible annual board meeting there.

Loopholes such as the infamous double Irish Dutch sandwich have allowed a single technology firm to avoid $3.4 billion in tax since 2007. But, while the Irish are closing the double Irish Dutch sandwich, the Australian government is doing nothing of the kind. At the recent G20 summit, Mr Hockey claimed that Australia had kicked off moves towards better financial transparency by committing to a 2017 start date for the so-called common reporting standard on banking information. But that start date puts Australia behind over 40 countries, including the UK, Germany, Cyprus, Hungary, Poland, Bermuda, the Cayman Islands and Jersey, which will start the process for automatic exchange of financial information a full year earlier than us, in 2016.

Since the Abbott government have come to office they have talked the talk about multinational profit shifting but they have not acted. There is not a single new dollar that they have added to the government bottom line through a crackdown on multinational profit shifting. Zero new revenue means zero new action. Their actions so far have been entirely in line with what the Liberal-National parties did in opposition, when they voted against Labor's Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013, which plugged loopholes in Australia's transfer-pricing rules and anti-avoidance provisions, and when they attempted to block our Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012, a measure championed by the then Minister for Financial Services and Superannuation, Bill Shorten. As well as giving $1.1 billion back to multinationals, the government have announced the sacking of 4,700 people from the Australian Taxation Office, including as many as 1,000 auditors with specific expertise in complex international tax structures. Some of these gamekeepers will likely turn poacher.

Last November I moved a private member's bill in this House to ensure that we get more information in the public domain. With the conversation about tax fairness roiling across the front pages and back bars of Australia, Labor believes that tax reporting should happen sooner, not later. Whether you think that multinationals should pay more tax or less tax, it is hard to see why you should believe the public debate ought to be dumbed down, but the Abbott government are opposing Labor's private member's bill to get more information out in the public arena. Labor will give strong consideration, if we win government, to reintroducing the measures scrapped by the Abbott government when they came to office. Those include reforming the offshore banking unit to ensure that only genuine offshore banking activities access a concessional rate, changes to multiple entry consolidated groups to ensure neutrality between foreign and domestic companies, and the repeal of section 25-90.

This is not anti-business. It is about making sure that all businesses pay their share, grounded in the principles of equity, efficiency and simplicity.(Time expired)

See this speech in context