Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to 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.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

It's my absolute pleasure to second the amendment and to speak to the Treasury Laws Amendment (OECD Multilateral Instrument) Bill 2018. The government's Treasury website states:

Australia is leading the global fight against multinational tax avoidance and is cracking-down on taxpayer tax evasion with a number of reforms announced as part of the 2016-17 Budget.

Well, how can that actually be possible when one in five of Australia's biggest companies have paid no tax in the last three years? Malcolm Turnbull and Scott Morrison say they've been cracking down on tax avoidance, yet we know their true tricky priority is looking after their buddies in big business. They are not only not cracking down on tax avoidance but indeed are giving them a further $80 billion tax cut. What a joke. There's no way that Australia's biggest money-makers aren't contributing to our nation's tax reserves! But unfortunately that is precisely the case. In 2015-16, 17 of the top 50 companies paid no corporate tax, leaving just 33 to shoulder that burden. Between them, they provided just under $20 billion worth of tax. Interestingly, the Prime Minister's old employer, Goldman Sachs, is among these. While it had revenues of at least $1.8 billion over the last three years, with an operating profit in each of those years, it paid zero dollars of corporate tax.

Australia is being deprived of billions in tax revenue, thanks to loopholes that the Turnbull government refuses to act on, despite Labor's alternative of tax transparency laws showing just how the people of Australia are losing. There are numerous studies and analyses that show the extent to which multinational tax avoidance prevents national governments and their citizens from receiving the funds they are due. This in turn inevitably means the tax burden falls unfairly on domestic companies and individuals, that global inequality is sharpened, and that public goods and services are not funded or delivered. We know that fair taxation is an essential element of a well-managed domestic and global economy. It is both inefficient and indeed immoral when companies play tricky, complicated games in order to avoid contributing their fair share to society—the society from which they derive their existence and indeed their profits.

We know that the introduction of public reporting of country-by-country reports, as suggested by Labor in our policy on properly assessing and taxing, could help stem the flow of missing money. The Treasurer, on the other hand, doesn't want to get his boys in big business offside and doesn't want to close these loopholes. Despite soaring corporate profits and the fact that Australia's company tax rate actually places us in the middle of the G20 pack, the only policy he has is a big-business tax cut. The government continues to talk a big game on multinational tax, yet to date it has failed to actually deliver any significant results.

The multilateral convention that we are here to discuss as part of this legislation today is a tax treaty that enables jurisdictions to quickly modify their bilateral tax agreements to give effect to internationally agreed tax integrity rules and improved dispute-resolution mechanisms. The multilateral convention is one of many action items of the OECD in the G20's base erosion and profit shifting strategies to coordinate global action against tax avoidance and minimisation strategies by multinational companies. This is indeed a global effort and global push, but one that it seems the Turnbull government doesn't want to wholly sign up to. The multilateral instrument will enable jurisdictions to swiftly modify their bilateral tax treaties to implement measures designed to better address multinational tax avoidance.

Although Australia has adopted the majority of the convention's articles, there are two major components that for some reason this government has decided not to agree to. The first is article 10, an anti-abuse rule for permanent establishments situated in third jurisdictions, which is a euphemistic way of saying tax havens. This article denies treaty benefits where an entity that is a resident of a jurisdiction party to a bilateral tax agreement derives certain income from other jurisdictions. The Tax Justice Network is opposed to this decision of government. It believes the Australian government should adopt article 10 without reservation to further deter the use of secrecy jurisdictions to avoid paying tax. The OECD notes this particular article was intended to address:

… potential abuses that may result from the transfer of shares, debt-claims, rights or property to permanent establishments set up solely for that purpose in countries that offer preferential treatment to the income from such assets.

The network is deeply disappointed this government has not adopted the article as it provides a loophole for big business to continue to avoid taxation.

The second article that this government has refused to adopt from the treaty is article 12. The intention of this article was to ensure where an intermediary habitually concludes contracts or habitually plays the principle role in concluding substantially finalised business contracts in a jurisdiction on behalf of a foreign enterprise that arrangement would be deemed to constitute a permanent establishment. A permanent establishment is a taxable presence threshold for determining whether a jurisdiction can tax business profits derived by a foreign resident enterprise. This means, potentially, a foreign enterprise can avoid local taxation of business profits by implementing arrangements that circumvent the existing treaty based definition of a permanent establishment. The Tax Justice Network, again, have told us that they are deeply disappointed that the Australian government has decided to not adopt this provision, which is a reversal of their initial position. The network believes that this article would have assisted in further curbing foreign multinational entities from seeking to artificially avoid creating a permanent establishment. This, in turn, will prevent the government from taxing these businesses profits.

Despite these obvious flaws, Labor do support the treaty action overall. But we observe that this government has done virtually nothing to address the key issue of multinational tax avoidance through the refusal to take up these two critical articles. Even from opposition, Labor has been alone in carrying forward the vital policy work and policy arguments on this vital issue of multinational tax avoidance. Back in 2015 Labor proposed a comprehensive multinational tax package that included a number of measures specifically designed to address the scourge of debt deduction loopholes. This alone would have added $5.4 billion to the budget bottom line over a decade. Elements of this proposed package included the adoption of worldwide gearing ratios to address the issue of thin capitalisation; the implementation of a publicly accessible registry of the beneficial ownership of Australian legal entities, including trusts, as per the G20 principles that Australia has adopted; and the restoration of $100 million as the tax transparency threshold in relation to the public reporting of tax data for private companies. It would also have appointed a community sector representative to the Board of Taxation and delivered increased compliance funding for the Australian Taxation Office.

Meanwhile, the Turnbull government talk a big game on multinational taxation, but they've spent more on spruiking their laws than the legislation has actually directly raised, continuing the coalition's form of neglect of this pressing reform area. In 2012 the coalition opposed Labor's tax law amendment on cross-border transfer pricing, which, after passing, was integral to the ATO's recovery of some $300 million from Chevron. There are numerous studies and analyses that show the extent to which multinational tax avoidance prevents national governments and their citizens from receiving the funds that they are fairly due. This in turn leaves the tax burden on domestic business and on individuals in each nation. This result serves only to heighten global inequality and the lack of funding available for the vital services needed in our community for our citizens, for our people. Labor regards fair taxation as an intrinsic and essential element of a well-managed domestic and global economy. It is both inefficient and, as I said before, immoral when companies are able to play the game, use the loopholes, and put their funds and run their profits through tax-avoidance centres instead of paying their fair share under the tax regime that should fairly apply in Australia.

If the government were serious about tax fairness, it would adopt Labor's plan to close loopholes and crack down on tax havens; it would tighten debt deduction loopholes used by multinational companies, which would improve the budget bottom line by billions of dollars; it would introduce public country-by-country reporting of tax information specifically about where and how much tax was paid by large corporations; and it would provide protection for whistleblowers who report tax-evading entities to the ATO. We believe these whistleblowers should be rewarded where information provided by them results in more tax being paid, allowing them to collect a share of that tax penalty. Let's make sure we get the real word on what's happening. The joint parliamentary committee report was unanimous in its view as to the changes that we should see to whistleblowing laws here in Australia and, once again, the government squibbed on its proposed changes to whistleblowing legislation.

The government needs to introduce a publicly accessible register for the beneficial ownership of Australian listed companies and trusts. This will provide transparency. It will allow anyone to find out who the real owners of our firms are and to see if they are complying with tax requirements and laws, instead of using these structures to avoid taxation. The government should introduce mandatory shareholder reporting of tax-haven exposure. Companies must disclose to shareholders as a material tax risk if a company is doing business in a tax haven, because there are real risks for the ongoing profitability of those companies where they do this contrary to what not just should be the law of this country but is the law of many others. The government should get on with appointing a community sector representative to the Board of Taxation to ensure community views are heard in tax design and review processes.

Finally, it should be introducing public reporting of AUSTRAC data and requiring the annual public release of international cashflow data. But there's more the government could and should do. They should require government tenderers to disclose their country of tax domicile. All firms tendering for government contracts worth over $200,000 could be made to state their country of domicile for tax purposes. Given we'll provide them with taxpayer dollars, it probably makes sense to know where those dollars will end up. The government can develop guidelines for tax haven investment by superannuation funds. They could require the ATO to annually provide information on the number and size of tax settlements. They could deliver more tax transparency by restoring Labor's $100 million threshold for public reporting of tax data by private companies.

We support this bill, but we note it is still deficient in the way in which the government has signed up to this treaty. Without the resources of Treasury we're not in a position to know precisely why the government declined to adopt the treaty in full but, under a Shorten Labor government, we will review that decision. We want to best understand why the government is doing what it's doing. Why is it not signing up to ensure we have the tightest of tax laws in this country, to ensure we don't have leakage, to ensure we have the revenues we need to provide the services our community badly needs and in fact deserves? We will also, as it would seem we are left to, continue to lead the debate on multinational tax avoidance, because we know that when multinationals—or indeed anyone—don't pay their fair share of tax, the rest of us are left to pick up the tab. That's not fair to the Australian taxpayer or the Australian community, and it would seem that the government is quite happy to not be fair.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

I'm speaking in support of the amendment moved by the member for Fenner. The Treasury Laws Amendment (OECD Multilateral Instrument) Bill 2018 contains amendments to the tax agreements act to give the force of law in Australia to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. Labor does support this bill, subject to the amendment that's been moved by the member for Fenner. But we note that the government has declined to adopt two of the articles in the convention that are designed to deter the use of tax havens. Under a Shorten Labor government we will review the decision not to sign up to those parts of the treaty, utilising the resources of Treasury.

Looking at the detail of the bill, the multilateral convention is a tax treaty that enables jurisdictions to quickly modify their bilateral tax arrangements. This helps to give effect to internationally agreed tax integrity rules and improve dispute resolution mechanisms. The multilateral convention is one of many action items of the OECD's and the G20's base erosion and profit shifting strategy to coordinate global action against tax avoidance and minimisation strategies by multinational companies. The project was initiated at the G20 in 2012 and is headed by the OECD. Although Australia has adopted the majority of the multilateral convention articles, it has not agreed to a number of key aspects. They are article 10, which is the anti-abuse rule for permanent establishments situated in third jurisdictions—or tax havens, as they are more commonly known—and article 12, which covers artificial avoidance of permanent establishment status through certain agreements. I want to note that, without a clear rationale from the Turnbull government about their refusal to sign these tax haven measures, a future Shorten Labor government, if we are elected at the next election, would utilise the resources of Treasury to explore the ramifications of not signing these two articles.

When it comes to tackling multinational tax avoidance, it's Labor that's been leading the way, with the Turnbull government following in our wake. One in five of Australia's biggest companies have paid no tax for at least the past three years. There's a lot of anger and resentment out there at the moment in the community about many of these corporations. We've seen that in the approach that many people have taken to the banking royal commission and to the disclosure of the amount of tax that big companies actually pay in this country and the enormous deductions that they're able to use to basically reduce their taxable income and in some cases pay no tax at all. It should never be forgotten that it was Labor that originally established these tax transparency rules to oblige those companies to disclose the amount of payments they are making to governments through the taxation system. And it was the coalition that got into bed with the Greens and watered down those tax laws. They reduced the number of companies that are subject to the law and therefore have to report on an annual basis.

This government claims that they're about tax transparency. But in practice they're actually doing the opposite, reducing the amount of transparency and the number of companies that need to disclose the tax that they pay to the Australian government. We all know that this government's priority at the moment is an $80 billion tax break for the biggest companies throughout the country. They want to give a tax cut to some of the largest corporations in Australia—which include those big banks that have done such a wonderful job by the Australian people over the course of the last decade! As we're seeing in the royal commission, they've been such great backers of Australian small businesses, farmers, and families and have been so generous in their approach to their insurance arms, to their wealth management arms and to disclosure and transparency! Yet this government wants to give those sorts of organisations and the people who run those organisations, and their shareholders, a tax cut. Well, Labor simply won't stand for it. We've had enough of these organisations ripping off the Australian people, being deceitful, being dishonest—sending farmers, small businesses and families to the wall—and getting a tax cut. It's not on, and we're going to stand up for those hardworking small businesspeople, the farmers, Australian workers and their families, and oppose this government's dastardly attempts to give those organisations a tax cut.

Australia is also missing out on billions in tax revenue thanks to loopholes that the Turnbull government refuses to act on, despite Labor's tax transparency laws showing just how much the people of Australia are losing. The introduction of key public reporting of country-by-country reports, as suggested by Labor—in particular in the resources and extractive industries such as mining, oil and gas—could help stem the flow of missing tax revenue.

Labor's also leading the way in ensuring that large Australian resources companies are good corporate citizens and maintain accountability and transparency through systems that not only ensure they pay their fair share of tax but help combat corruption, particularly in countries where they're operating offshore mining and resources projects, many of them in our backyard in the Pacific. Our policy will require large extractive companies to disclose payments arising from any activity involving exploration, prospecting, discovery, development and extraction. Disclosure under the regime will be on a country-by-country and project-by-project basis. Payments to be disclosed include taxes on income; production and profits of companies; royalties; dividends; signature discovery and production bonuses; fees, including licence fees, rental fees and entry fees; other payments, licences and concessions; payments for infrastructure improvements; and production entitlements such as profit resources. Payments must be disclosed if they are made to any national, regional or local authority of the country, including a department, agency or state-owned enterprise.

Disclosure under this regime should apply to large extractive companies in Australia. A large company shall be defined as a company that meets at least two of the following criteria: it has a balance sheet total that exceeds $50 million, its net turnover on the balance sheet date exceeds $100 million or the average number of employees during the financial year to which the balance sheet relates exceeds 250. A single or series of related payments within a financial year must be disclosed if the payments amount to at least $150,000. A mandatory reporting regime for extractive industries will increase the availability of verifiable, disaggregated information from company financial reports regarding payments made to governments, and this information would build public accountability and trust in companies and governments.

A Shorten Labor government, if we're elected, will also establish a multistakeholder committee to work with the government on the implementation of the reporting regime, including defining project-level reporting and the establishment of an online reporting mechanism to ensure public transparency and accessibility. The legislation would include equivalency provisions so that companies captured by other jurisdictions due to cross-listing on stock exchanges would only be required to lodge one report. If we're elected, the extractive industries transparency regime will require subjected companies to begin reporting payments in 2020.

In line with consultation from interested stakeholders, this policy mirrors as closely as possible the UK scheme and the equivalent provisions contained therein. Our policy, if we are elected, will ensure that extractive companies are among the most transparent and accountable in the world. Our companies will be adopting best practice when it comes to ensuring that they're disclosing payments to government and they're transparent, accountable and combatting corruption in the countries in which they operate. Improved transparency and accountability in extractive industries is an effective mechanism to combat corruption in developing and developed countries.

Again, it's clear that the Turnbull government doesn't want to close some of the corporate tax loopholes that exist. Some of those relate to tax havens that are part of the OECD and the G20's base erosion and profit shifting agenda. That's evident in the fact that they're not signing up to that article contained in that plan. Despite soaring corporate profits and the fact that Australia's company tax rate places us in the middle of the G20 pack, the only policy that they have is one for a big business tax cut, not further transparency, and that's simply not good enough.

That's why Labor is proposing to look at those additional two articles that the government hasn't signed up to, and that's why we're proposing and promising that if we're elected we'll go further, with additional transparency and accountability, particularly in the resources and extractive industries, on a country-by-country and project-by-project basis. I urge all members to support the very sensible amendment that has been moved by the member for Fenner.

Kelly O'Dwyer (Higgins, Liberal Party, Minister for Revenue and Financial Services) Share this | Link to this | Hansard source

I listened carefully to the speech of the member for Kingsford Smith on the Treasury Laws Amendment (OECD Multilateral Instrument) Bill 2018, and I was a little disappointed to find that it was devoid of so many facts. So, I appreciate the opportunity to now set the record straight when it comes to the government's commitment to tackling multinational anti-avoidance of tax. If a multinational corporation makes money in Australia, it is right they pay tax in Australia. The Turnbull government has introduced new laws to close loopholes, to ensure that profits are taxed here. The Turnbull government is absolutely determined to make sure that everyone is paying the right amount of tax, and large multinationals must pay their share. Deliberate tax avoidance will not be tolerated, and tax cheats will be tracked down and will face the full force of the law.

Whilst the Turnbull government have taken strong action and introduced tough new laws, Labor, by contrast, when they were in government, did virtually nothing to combat tax avoiders, and in opposition they opposed our Multinational Anti-Avoidance Law and the introduction of the country-by-country reporting regime. Paying tax is not optional. The Turnbull government will ensure that multinational companies pay the tax that they owe in Australia. As a result of our new laws, more money will be invested here, benefitting our community and helping guarantee the essential services and infrastructure that Australians rely on.

Given the fact-free contribution by the member for Kingsford Smith, I'd like to place on record that, since the government established the Tax Avoidance Taskforce, the Australian Taxation Office has raised around $7 billion in income tax liabilities against large public groups and multinationals. The Australian Taxation Office has collected $4.1 billion in cash, with $3.1 billion of that amount from multinational enterprises. Of that $3.1 billion, the Australian Taxation Office has collected over $1 billion from ecommerce companies. The government's coordinated plan to tackle profit shifting and avoidance of Australian tax law will keep paying dividends as well. The Australian Taxation Office confirms that the Multinational Anti-Avoidance Law alone has seen additional sales income of $7 billion each year now being returned in Australia. Furthermore, hundreds of millions of dollars of additional GST revenue is now being paid. The Australian Taxation Office has publicly indicated that there is a significant change in how multinational companies are approaching their Australian tax obligations as a result of the tough new anti-avoidance laws put in place by this government and not supported by those opposite. In fact, Australia is leading the way in combatting multinational tax avoidance—no thanks to those who are not trying to find solutions to the problems that we have identified and tackled.

I would, though, like to thank those who have made a contribution to this debate. This bill will help Australia to quickly and efficiently modify the majority of Australia's bilateral tax treaties to bring them into line with international best practice when it comes to tackling multinational tax avoidance. It will complement the other measures implemented by the government to enhance tax system integrity, including the Multinational Anti-Avoidance Law, country-by-country reporting and the diverted profits tax. The multilateral instrument is a unique tool that is expected to update more than 1,100 bilateral tax treaties worldwide. At present, based on the known positions of other jurisdictions, the multilateral instrument will modify 31 of Australia's 44 existing bilateral treaties. Modifying these treaties through the multilateral instrument will save time and expense, significantly, for Australia, compared to the alternative of bilaterally renegotiating each treaty to achieve similar outcomes.

The multilateral instrument will ensure that multinational entities are no longer able to exploit Australia's bilateral tax treaties in order to avoid paying tax. Additionally, the multilateral instrument will provide greater certainty for taxpayers by strengthening current tax treaty related dispute resolution procedures. Australia has committed to working closely with its treaty partners to resolve treaty related tax disputes through the multilateral instrument. Where both treaty partners agree, taxpayers will also have access to independent and binding arbitration, thereby allowing disputes to be resolved more quickly.

Looking to the future, the government will continue to work with the G20 and the OECD bilaterally to ensure that the international tax system operates as efficiently, fairly and effectively as possible. The multilateral instrument clearly demonstrates the benefits of international cooperation, and the government encourages other jurisdictions to adopt it to the fullest extent possible. I commend the bill to the House.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

The original question was that the bill now be read a second time. To this the honourable member for Fenner has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question now before the House is that the amendment be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.