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

by leave—The issue of multinational profit shifting is about fairly sharing the revenue burden. As the former Treasurer has pointed out, this is about revenue adequacy because when a handful of big businesses ship their profits offshore it hits the federal budget's bottom line. It is about fairly sharing the revenue burden. When a small number of big firms do the wrong thing, it is the great majority of businesses, large and small, the self-employed and the PAYG taxpayers who end up paying more than they should. It is also about our prospects for long-term growth. If we do not tackle multinational profit shifting, we are effectively turning a blind eye to distortions in the market which are going to slow economic growth over time.

These are the sorts of dumb failings in the tax system which the former Treasurer set about trying to fix because they are loopholes that reward the wrong kind of ethic and they operate unnervingly like those old-fashioned subsidies, that old McEwenist policy, which favoured producers over consumers, which distorted the allocation of resources and which encouraged firms not to test themselves against the market but to test themselves against the rule book. We do not need that kind of economic activity because that is harmful economic activity—it encourages firms to focus their energies on getting their accountants to play with loopholes—loopholes that might allow debt shifting within organisations not in order to improve the productive capacity of the economy but in order to find the next loophole in the tax system. It operates a bit like trade wars, where each of us draws our knife only to have the effect of cutting off one another's face. We need to be able to confidently sustain an adequate revenue base.

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