Peter Hendy (Eden-Monaro, Liberal Party) Share this | Hansard source

I think the shadow Assistant Treasurer thinks he is addressing undergraduates at ANU rather than the Australian parliament. It is clearly evident he still views the world from the ivory tower. As a former CEO of the Australian Chamber of Commerce and Industry and also, very early in my career, the Director of the Business Taxation section of the federal Treasury, I know a bit about this topic, so allow me to draw on decades of real-life experience at the forefront of policy debate on business and taxation to enlighten him.

The notion that the Australian Labor Party is the party that is serious about cracking down on the tax practices of big business is ridiculous. It is preposterous. It is laughable. The fact is that nothing could be further from the truth. Recall if you will the disaster of the mining tax, a tax the shadow Assistant Treasurer wants to reinstate. This is a tax, I remind you, that fell short of the original revenue estimates—and it did not fall a little short; it fell 97 per cent short. The shadow Assistant Treasurer and the Labor Party irresponsibly locked in billions of dollars of expenditure on the basis of anticipated mining tax revenue. Rather than taxing multinational companies, the perverse outcome of the mining tax before it was abolished was that it was actually doing the reverse—it was paying money to multinationals. It was doing the exact reverse of what the shadow Assistant Treasurer claims. So be very cautious when listening to those opposite on matters of taxation. Someone we might want to listen to is the Secretary-General of the OECD, Angel Gurria. Talking about Australia's strong leadership in international tax policy, he said:

Had it not been for the very serious political support that we have gotten from the G20 presidency of Australia, really we would not have gotten here.

As the Secretary-General noted, the coalition is very concerned about the issues of base erosion and profit sharing. We understand that the issue of multinational corporate tax avoidance is a subject of considerable public discussion. We understand that, and that is why the coalition will continue to examine the issue and we will not hesitate to take action.

This government is pursuing all avenues to ensure multinationals pay their fair share of tax. Unlike the view from the ivory tower, the reality is not straightforward. The development of the digital economy has made this endeavour increasingly complex. Australia has a suite of robust domestic laws to counter base erosion and profit sharing. These domestic laws include a comprehensive thin capitalisation regime; they include controlled foreign company laws; they include tough transfer pricing rules; and they include extensive anti avoidance rules.

The coalition is providing $87.6 million to the Australian Taxation Office over the next three years to review the affairs of companies that have undertaken an international restructure or have significant levels of related-party, cross-border arrangements. Our domestic processes are not enough; international cooperation is required to address these issues. Significant progress has been achieved to date on the OECD's two-year base erosion and profit-sharing action plan, and Australia is a key contributor. As G20 president in 2014, Australia was at the forefront of promoting progress of this international cooperation. There has been significant progress to date, and it is anticipated that the remaining recommendations will be finalised by December of this year.

The base erosion and profit-sharing plan is ambitious, but it is something that we need to get right. We, like the OECD and other G20 member countries, have been consulting with business on the agenda, and we will continue to do so. We need to ensure that the structures that we put in place are effective and do not merely create an impost on international trade and economic growth. For example, following consultation with stakeholders and the ATO it became clear that the targeted anti-avoidance provisions of which this shadow assistant Treasurer has had so much to say would be ineffective. That is why it will no longer form part of the broader package of measures to address profit shifting by excessive allocation of debt of the Australian operations of multinationals. This is a case of conducting the necessary due diligence and consultation with stakeholders and delivering optimal outcomes. This is the way it is done in the real world. We saw far too much evidence of public policy being made without due diligence and without consultation under the last government. Nonetheless I can assure you that we are committed to working as hard as we can to make sure that companies that earn profits in Australia pay tax in Australia. I thank the chamber.

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