Jane Hume (Victoria, Liberal Party) Share this | Hansard source

I rise today to speak on the bill introduced to this place by a parliamentary colleague from the Labor Party who recently departed this place, Senator Gallagher. Senator Gallagher's bill, the Taxation Administration Amendment (Corporate Tax Entity Information) Bill 2017, as has been discussed already, lowers the threshold for publicly reporting corporate tax information of Australian private companies from $200 million to $100 million.

This is not the first time the Australian Labor Party has tried to control confidentiality and commerciality and invade the privacy of private companies whose only crime, potentially, is running a legitimate business. When in government they passed legislation to lower the reporting threshold to corporate tax entities with a reported income of $100 million or more. As noted in 2015 by the then Assistant Treasurer, my good friend and esteemed colleague the Hon. Josh Frydenberg MP:

These laws abrogate the fundamental right to confidentiality.

Moreover, the information to be disclosed, already in the hands of the Australian Taxation Office, will not help the ATO in assessing additional tax. Public disclosure of the information as prescribed in this Labor bill will not inform the public any more than they already are informed and will be unlikely to raise additional revenue that will go anywhere near compensating for the additional administrative burden, the red tape and the invasion of privacy that it will impose.

I say 'invasion of privacy' intentionally, because submissions on the measure, before it was introduced by Labor in this place, highlighted the risk that disclosing the tax affairs of closely-held companies will effectively disclose the tax affairs of those companies' owners—the individuals who own the company, not the company itself. They also highlighted the risk of making public the commercial-in-confidence information of private companies. This bill raises serious privacy concerns but at the same time does absolutely nothing to help the tax office actually assess tax. It's a violation of privacy that is a craven attempt by the Australian Labor Party to further demonise the embattled business community and it ignores the laudable efforts of the coalition government to address tax avoidance, particularly by multinational companies.

The coalition has much to be proud of in its record of addressing corporate tax avoidance. Indeed, multiple game-changing pieces of legislation have already been passed in this place and in this parliament. The government is committed to combating tax avoidance and we are implementing far more well-considered and balanced measures than this. In fact, Australia has been a world leader in combating multinational tax avoidance. As G20 president in 2014, Australia led the global response to corporate tax avoidance by multinational companies and ensured that it remained at the top of the international agenda. Under Australia's leadership the first of the G20/OECD Base Erosion and Profit Shifting recommendations were delivered in 2014. Indeed, Australia was one of the first companies to commit to implementing the OECD's country-by-country reporting. Country-by-country reporting requires large multinationals to report annually for each jurisdiction in which they do business the amount of revenue, profit, income tax and economic activity.

Introduced in December 2015, country-by-country reporting is a very effective information-sharing regime for use by tax and revenue agencies around the world, about which we have heard a significant amount from the Commissioner of Taxation, Chris Jordan, as recently as the last budget estimates. He described country-by-country reporting as being of 'enormous value' and 'transformational' in our international tax work. For the first time, tax administrations have received a global picture of multinationals' operations. This was a very significant step into improving the transparency for tax administrations, and it was Australia that paved its way.

The coalition's 2015 budget also introduced the common reporting standard to combat multinational tax avoidance by exposing taxpayers with hidden offshore investments. The common reporting standards, you may recall, call upon jurisdictions to obtain information from their financial institutions and automatically exchanges that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and the taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. The coalition government legislated for this transformative reform in 2016, and we have been reporting since 1 July 2017.

In my capacity as Deputy Chair of the Senate Economics References Committee, I did, in fact, sit on the inquiry into corporate tax avoidance, which delivered its final report just last month. That inquiry has been going on since 2014 and was recommitted to this parliament immediately after the election in 2016. In that report it was noted the success of the Multinational Anti-Avoidance Law, MAAL, and also the diverted profits tax, DPT, both of which have been integral parts of the government's additional $7 billion in sales revenue coming into that tax net, something that the coalition is particularly proud of.

The Turnbull government has been extremely tough on tax avoidance and has been so while still respecting the privacy of private companies. The government has also been successful in applying pressure on multinational corporations that try to avoid paying tax in Australia and, as a consequence, many of the companies in question have changed how they report taxable activities in Australia. Coalition senators noted in our comments in that particular report that the coalition wholeheartedly agrees that transparency is important to ensure that companies pay the right amount of tax. However, we also noted that a balance must be struck between taxpayer confidentiality and the need for any information made public to be well understood and also to be relevant.

While the coalition's track record on combating tax avoidance has been undoubtedly outstanding, we acknowledge that there is more to be done and, indeed, we are not done yet. In the 2018-19 budget, the government announced further measures to ensure businesses are paying their fair share of tax. These measures include such positions as strengthening the rules that limit interest deductibility, to stop companies shifting profits out of Australia, including requiring companies to align clearly and transparently the values of their assets with the values included in their financial statements. A further measure is broadening the scope of large multinationals being subjected to the Multinational Anti-Avoidance Law and the diverted profits tax. So these measures further strengthen already legislated and implemented measures to combat corporate tax avoidance. It's imperative though that, whatever measures are established to combat tax avoidance, consideration must be given that any requirement does not unreasonably add the burden and red tape to businesses, noting that many of the businesses—in fact, the vast majority of businesses that we are dealing with—are law-abiding corporations.

This Labor bill is yet another piece of legislation from those opposite designed to inundate business with further compliance and regulatory burden. Never to be outdone, the Australian Greens, for whom the concept of business is obviously foreign, wish to amend the bill to further lower the reporting threshold to $50 million. The attitude of the Australian Labor Party and the Greens towards business is part of the irrational and desperate rhetoric of class welfare. Were we let them to have their way—

Senator Whish-Wilson interjecting—

Class warfare, not welfare!