Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | Hansard source

[by video link] I'm speaking in support of the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021, but before I get to the details of the bill, I want to make some introductory remarks about the important roles that charities have played in the community that I represent during this very difficult period of dealing with another outbreak of COVID in Sydney. Over the course of the last three or four weeks I've been ringing a lot of elderly members of our community to check in on their welfare during this difficult time, particularly given that they are not able to get out as much and have as much human contact. I have been blown away by the important work that charities in our community have been performing in supporting not only the elderly but a range of age groups across our community, ensuring that their mental health is in a good state and they are able to access food and groceries, and providing assistance with that; helping with medical appointments; and just improving the general wellbeing of people in our community during this difficult time. I want to congratulate and pay tribute to all the charities in Kingsford Smith and across Australia that have provided support to vulnerable people in our community during this difficult period of COVID. You are the lifeblood of our community and you have helped many, many people through this difficult period. You and your volunteers deserve praise and respect for the work that you do, and we thank you so very much.

In that light, it's a great shame that the Morrison government have been attacking charities over the course of the last couple of years because they may not like what those charities do, what they stand for or what they believe in. If a charities have a different philosophical view to this government, then the government has been cracking down on them and condemning them. The words of the minister, Senator Seselja, highlighted exactly this government's approach, when he said that the government would 'crack down on activist organisations masquerading as charities'. That's code for the government cracking down on organisations whom they don't like, who don't fit with their philosophical view of the world politically and whose activities may highlight some of the wrongdoing and the underhanded tactics of this government, particularly when it comes to issues such as climate change. I think it's a great indictment of this government that they have been attacking charities in that manner over the course of the last couple of years.

Nonetheless, this particular bill is a positive development for charities in that it amends the Income Tax Assessment Act to require non-government entities seeking endorsement as deductible gift recipients to be a charity registered with the Australian Charities and Not-for-profits Commission or be operated by a registered charity. Ancillary funds and, especially, listed entities will continue to be exempt from this requirement. These changes were announced by the government in their 2017-18 Mid-Year Economic and Fiscal Outlook, and the requirement to be a charity already applies to the majority of general DGR categories under our tax law.

This measure will amend the special conditions applying to the remaining general DGR categories and will require non-government entities to maintain charity registration in order to retain their eligibility for DGR endorsement. The amendments include a 12-month transition period, which will give non-charity DGRs time to meet the requirements for charity registration without losing that DGR status, and some DGRs will be able to apply for a longer transition period of up to three years. The measure will hopefully improve consistency in the regulation, governance and oversight of DGRs, in turn helping support continued confidence in the sector and support for DGR entities. These amendments are one part of the deductible gift recipient reforms that were announced in that MYEFO in 2017-18, and the estimated cost for the measure is quite minimal—$0.2 million. That's a reform that we support, but I again reiterate my earlier comments that this government can't pick and choose which charities it likes to operate in Australia. That's a very Stalinist view of the world. All charities, as long as they meet the legal requirements, must be able to register, operate and perform their duties and their responsibilities with their volunteers according to Australian law, free from political interruption from this government.

The second schedule to this bill amends the Income Tax Assessment Act to remove the preferential tax treatment provided for offshore banking units, OBUs, and provides transitional arrangements for existing OBUs. This regime is a concessional tax regime that can be used by the Australian financial services sector to provide banking services to offshore customers. When Labor were in government, we cracked down on this tax break in 2011 to rein in banks conducting structured finance transactions through offshore vehicles. But in 2014 the coalition government decided to defer those key reforms, to help big multinationals pay less tax. This has unfortunately been a common theme of this government over its eight years in office.

The government has been quite lax when it comes to ensuring that we have stringent tax laws that crack down on the ability for multinationals to shift profits overseas to avoid paying tax here in Australia and to structure their businesses to avoid tax in our system. The Morrison government has always been too slow to close schemes that let multinationals take advantage of our tax system. Really, it's been dragged kicking and screaming into looking at this issue and taking it seriously through the OECD. Other OECD nations have seen what damage profit-shifting and tax-minimisation schemes can do to not only the GDP of developing nations but, of course, the livelihoods and living standards of their citizens. Avoiding tax in a particular jurisdiction can have a dramatic effect on that country's revenues and GDP and, ultimately, the living standards of that country.

Unfortunately, particularly in the tech space in Australia, we've had many classic examples of large multinational corporations that are able to structure their tax arrangements to avoid paying corporate tax here in Australia. That comes at a cost to the Australian taxpayer. The Morrison government talk a big game about supporting global reform of the tax system, but the reality is that Australia has been out of the game when it comes to this international reform process through the OECD. They won't close debt deduction loopholes or crack down on tax havens. One-third of large companies still pay no tax here in Australia on their profits, and that's despite promises from the Morrison government to reduce tax avoidance. They've been caught out making announcements but failing to follow through on those announcements with any decent reform that actually cracks down on multinational tax avoidance.

Whilst the government are keen on chasing debts from the average Australian welfare recipient through robodebt, more recently in respect of payments associated with JobKeeper and supplements that were provided during the COVID period, they don't do the same when it comes to chasing multinationals that are avoiding tax or, indeed, asking those big corporations that made profits out of JobKeeper over the course of the last 12 months, and weren't eligible under the criteria for receiving JobKeeper, to make those payments back to the Australian people. It's now more important than ever, given the large deficit that our budget now has and the growing net debt of our nation, that everyone, including large corporations, pay their fair share of tax here in Australia. With many small firms in genuine distress amid the latest round of lockdowns, the Morrison government must adopt a zero-tolerance approach to companies that abuse accounting loopholes to minimise their tax.

What's the legacy of the lack of reform and the failure to act on these tax loopholes and act as a good global tax citizen? The coalition's record is clear from the lives of everyday Australians: stagnant wages, insecure jobs, increased costs of health care and child care, longer waits to see a GP, a trillion dollars in debt and baked-in expenditure for the next decade which is unfunded and will only see the budget deficit worsen over time. The government's own budget forecasts show a decline in real wages over the next four years, and independent analysis by the McKell Institute shows that the policies under this government have made the average Australian worker $13,000 worse off, compared to real terms. After promising eight surpluses and delivering eight deficits, including the largest in Australia's history, the government's legacy will be intergenerational debt, without a generational dividend.

So improving the budget bottom line is very important, and, to achieve that, we must make sure that we are cracking down on tax havens and tax arrangements that allow big multinational corporations to shift profits overseas or to structure their tax affairs to avoid paying tax here in Australia. The government's ability to implement measures that are being pushed by the OECD and internationally—and, indeed, by the Biden administration now—to crack down on profit-shifting and crack down on multinational tax avoidance will be the key to ensuring that we get the budget back on an even keel and in a position where our kids don't inherit a generation of debt and deficit that they can never pay back and that confines them to lower living standards and lower real incomes in the course of their working lives.

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