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

For the avoidance of any doubt, I will move the second reading amendment that has been circulated in my name, which I understand the member for Parramatta will second when I have concluded my remarks. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes the Coalition’s failure to close multinational loopholes and its failure to improve tax haven transparency".

Labor supports the Treasury Laws Amendment (OECD Multilateral Instrument) Bill 2018, which contains amendments to the International Tax Agreements Act to give force of law to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, known for convenience as the multilateral convention. The multilateral convention is a tax treaty that enables jurisdictions to quickly modify their bilateral tax agreements to give effect to internationally agreed tax integrity rules and to improve dispute resolution mechanisms. The proposal was announced by the government on 8 June 2017, at which point they announced that Australia had signed the multilateral convention and that they would introduce a bill to give the convention the force of law in Australia. The measure is estimated to give an unquantifiable gain to revenue over the forward estimates.

The multilateral convention is just one of many action items in the OECD's and G20's base erosion and profit-shifting strategy to coordinate global action against tax avoidance and minimisation strategies by multinational firms. The project was initiated by the G20 in 2012 and is headed by the OECD. Although Australia has adopted many of the multilateral convention's articles, it has not agreed to article 10, an anti-abuse rule for permanent establishments situated in third jurisdictions, also known as tax havens. It has not agreed to article 12, the artificial avoidance of permanent establishment status through certain arrangements, despite an earlier Treasury paper indicating that Australia would adopt this article.

So, Labor are left in the position where, while we support the bill, we haven't received a clear indication from the government as to why they aren't supporting article 10 and article 12. Given the government's lack of action on multinational tax avoidance—in particular, their lack of action on tax havens—we're particularly concerned about the government's failure to agree to article 10. So I want to note now that the failure of the government to provide a clear rationale for not signing up to these two articles means that a future Labor government would use the resources of Treasury to explore the ramifications of not signing these two articles and consider whether or not that question would be revisited by a future Shorten Labor government.

Once the multilateral convention enters into force for Australia—and subject to the entry into force for the relevant partner jurisdictions—it will have the following impacts on Australia's existing tax agreements with partner jurisdictions: first, in respect of withholding tax on amounts paid or deemed to be paid by a nonresident on or after 1 January, occurring on or after the latter date of entry into force of the multilateral convention for Australia and the partner jurisdiction; second, in respect of other taxes levied by Australia in relation to income profits or gains of any income year beginning on or after six months after the latter date of entry into force of the multilateral convention for Australia and each of its relevant partner jurisdictions; and, third, in respect of the mutual agreement procedure and mandatory binding arbitration, generally the latter date of entry into force of the multilateral convention for Australia and each of the relevant partner jurisdictions.

The Joint Standing Committee on Treaties recommended that parliament ratify the instrument, but I would draw the House's attention to the additional comments from Labor members and senators where they said that the committee process was 'constrained by inexplicably vague information provided in evidence from Treasury', relating to some revenue details.. The only non-Treasury submission to the committee process was the Tax Justice Network's. While overall supportive of parliament ratifying the instrument, they noted disappointment that the government had chosen not to support articles relating to tax havens. It's our understanding that if the bill isn't passed by the government's intended time frame of this month then a year of implementation would be missed. As such, Labor can assure parliament of our support for the expeditious passage of this bill through the other place.

As we debate in this place the issue of multinational tax avoidance, we do so in the broader context of my second reading amendment, noting that many of Australia's largest firms have paid no tax for the past few years. While inequality is high and rising and while this government has been cutting health funding and education funding, its priority still remains an $80 billion tax cut to big Australian firms, $17 billion of which goes to the big banks.

We know that Australia is missing out on billions of dollars in tax revenue due to the government's failure to act on tax loopholes. Labor has a clear and costed plan and clear proposals on improving tax transparency, so the Australian people can see more tax being paid by multinationals and garner a clearer picture of exactly how multinational tax avoidance is affecting the public coffers. Labor has proposed public reporting of country-by-country reports which could help stem the flow of missing money. But we've seen from this Treasurer an unwillingness to close the loopholes. Corporate profits have soared. Australia's company tax rate is only in the middle of the G20 pack, and we now have the example of the United States, whose corporate tax cut has not flowed through to a significant increase in wage growth.

Despite all of that, the government remains wedded to a big-business tax cut. They talk a big game on multinational tax, but their ads, in many cases, have cost more than their measures have actually raised. They've spent more on patting themselves on the back over multinational tax avoidance than they've raised through attempting to close loopholes. They were walking around claiming that their multinational tax laws had clawed back some $4 billion in multinational tax revenue—a claim which unravelled when it was revealed that the revenue was for tax years prior to the commencement of the government's multinational anti-avoidance law and their diverted profits tax. On 22 August 2017, the Minister for Revenue and Financial Services claimed that, of that $4 billion 'about $2.9 billion came from just seven companies alone'. Labor legislation was being applied in all seven cases cited by Minister O'Dwyer. Specifically, the cases involved Labor's Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 and the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012. The coalition voted against these bills in both houses.

That wasn't an isolated fib. There was extraordinary chutzpah from the Turnbull government when they tried to claim credit for the Australian tax office's victory over Chevron in the Federal Court by claiming their own piecemeal tax measures were 'working'. On the day of the Federal Court decision, Treasurer Morrison tweeted:

Chevron will pay more than $300m to the ATO proving the govt’s program of tax avoidance funding and new measures is working.

The thing that he didn't tell his Twitter followers was that he voted against the very laws which secured that judgement against Chevron. If Treasurer Morrison had had his way, if the parliament had gone the way he voted, then those laws wouldn't have got up, and the Chevron decision wouldn't have gone through, because, in 2012, the coalition voted against the then Labor government's Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012. The Treasurer voted against it. The Minister for Revenue and Financial Services voted against it. Yet, when that very bill was used to secure a judgement against Chevron that improved the budget bottom line and slightly reduced the debt blow-out that is occurring under this government, the Treasurer and the minister for revenue didn't issue a mea culpa. They pretended to the Australian public that it was their laws which had secured that judgement. Their reason for voting against that 2012 loophole-closing bill was a claim that the law was retrospective, but, in reality, that law simply clarified the operation of our tax laws and made sure multinationals couldn't exploit loopholes.

What we've also seen is that, as well as misrepresenting their own votes, the government have misrepresented Labor's votes. They've said that Labor voted against the multinational anti-avoidance law—a simple mistruth. Labor never voted against the Multinational Anti-Avoidance Law. What they may be confusing is Labor's voting against a dodgy deal between the Liberals and the Greens to water down tax transparency in Australia and take two-thirds of the private firms out of the tax transparency net by raising the threshold for tax transparency disclosure. I've got to say that, when I'm on my street stalls, I'm not besieged by constituents saying to me, 'The real problem is we have too much tax transparency in Australia!'

When we first came towards the first reporting deadline, we saw a farrago of confused excuses from this government as to why we oughtn't have tax transparency. They said it was a form of red tape. They said it would create security concerns, raise the kidnap risk for those running private firms, while later admitting that they had received no advice on kidnap risk from security or policing agencies, leading one tax expert to describe the purported kidnap risk as, 'The stupidest excuse for non-disclosure', that he had ever seen.

From this government we've seen an attempt to hide the truth from the Australian public about what big firms are paying. We've seen an attempt from this government to mislead the Australian people about their own record on multinational tax avoidance and about Labor's voting record in this place. Labor knows what needs to be done. We'll continue to lead the debate on multinational tax avoidance. If the Turnbull government were serious about tax fairness, it would adopt Labor's plan to close tax loopholes and crack down on tax evasion.

Labor's plan includes tightening debt deduction loopholes used by multinational firms, improving the budget by billions of dollars over the medium term. Labor's plan involves introducing public reporting of country-by-country reports, which is high-level information about where and how much tax was paid by large corporations—those with over $1 billion in global revenue.

Labor's tax plan involves providing protection for whistleblowers who report to the Australia Taxation Office on entities evading tax. Where whistleblowers information results in more tax being paid we would see them collecting a share of that tax penalty. It is not a radical idea, one which exists in an analogous form in the United States at the moment, and one which would ensure that we get greater compliance with our tax law.

Labor's multinational tax plan includes introducing a publicly accessible registry of the beneficial ownership of Australian listed companies and trusts. That will allow everyone to find out who really owns our firms. Shareholders shouldn't be able to use complex structures and sham ownership to avoid complying with corporate transparency rules. Yet, the government has explicitly said that while at some point in the undefined future they might do something about a beneficial ownership register, it won't include trusts. That beneficial ownership register itself is nowhere in sight and the government is devoting paltry resources towards introducing it.

Labor's multinational tax plan includes introducing mandatory shareholder reporting of tax haven exposure. If companies are doing business in a tax haven then they must disclose to shareholders that activity as a material tax risk. We would guide companies on which jurisdictions carry a material tax risk through a tax haven blacklist. Labor's multinational tax plan includes appointing a community sector representative to the Board of Taxation, ensuring community sector voices are heard in tax design and review processes. Labor's multinational tax plan includes introducing public reporting of Australian Transaction Reports and Analysis Centre data and requiring the annual public release of international cash flow data. Our plan would require government tenderers to disclose their country of tax domicile if they're bidding for government contracts worth more than $200,000. Those with particular tax domiciles wouldn't be ruled out, but we believe that it's appropriate that, if a firm is headquartered outside Australia, the Australian taxpayer is aware of where that tenderer is headquartered for tax purposes.

Labor's multinational tax plan develops guidelines for tax haven investment by superannuation funds. Those guidelines will be developed by the Australian Taxation Office in collaboration with the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority. Labor's multinational tax plan would require that the Australian Taxation Office's annual report provide information on the number and size of tax settlements. Finally, Labor's multinational tax plan would deliver more tax transparency by restoring the original tax transparency thresholds. When Labor enacted tax transparency laws, under then Treasurer Wayne Swan and Assistant Treasurer David Bradbury, we had in place a $100 million threshold for both public and private firms. In a dodgy deal between the Liberals and the Greens political party, this was raised to $200 million for private firms. That had the effect of taking two-thirds of the private firms out of the tax transparency mix. While the Greens have belatedly backflipped on this, supporting our private senator's bill to restore a lower threshold for reporting, the government eventually gagged debate when that bill was returned to the House. If the government really cared about transparency, if they really cared more about making sure that Australians know what company tax is paid, rather than protecting their mates, then they would facilitate debate in this House on that bill.

The Liberals won't close tax loopholes. The Liberals won't crack down on tax havens. Since coming to office, the Liberals have cut over 4,000 staff from the Australian Taxation Office. Only Labor has a complete tax-haven plan. Only Labor can be trusted to get tough on multinational tax avoidance.

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