Andrew Bragg (NSW, Liberal Party) Share this | Hansard source

I rise to speak about the Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill. I will start by talking a little bit about the environment into which this bill has been introduced. The Morrison government has a plan to get our country back in the black in a budget sense. A large part of getting our budget on track is, of course, to do with the way in which revenue is raised or not raised. People would be aware and senators would be aware that there has been an issue of especially multinational companies evading taxation not just here in Australia but in other jurisdictions.

Of course, this will be the first budget surplus in over a decade, and this is some years after the former Treasurer and now chief comptroller of the Labor Party, Wayne Swan, said that he would deliver four surpluses when he was the Treasurer. We're on track to actually deliver a surplus budget, and one of the foundations of that budget has been higher corporate tax collections. This financial year, we're due to collect almost $100 billion in corporate tax. In part, that has increased because we have been prepared to take sometimes difficult actions to improve the tax collection regime here in Australia but also work with our counterparts in other jurisdictions.

As my colleague Senator Brockman noted, when big companies don't pay tax, smaller companies or working Australians have to fill the breach, and we don't agree that there's any justification for any company that does business in Australia not to pay its fair share. Where companies fail to pay their fair share, it makes it so much harder to deliver those essential services that Australians rely upon.

Our government has a fine record in this area. We introduced and passed legislation in 2016 to ensure that there would be a higher level of multinational corporate tax collection. In time, an additional $13.1 billion of additional tax revenue has been collected as a result of legislation passed by this parliament three years ago. The Labor Party, of course, voted against that bill, and subsequently they went to an election in 2019 proposing new taxes on hardworking Australians in the form of the now infamous retiree tax and, of course, the housing tax. Both of these taxes are still Labor Party policy, and I note that on the weekend Chief Comptroller Swan again was talking about the importance of hanging onto these dreadful policies. So, on one level, they'll oppose our tough measures on multinational companies, but they will propose new taxes on hardworking Australians. This new multinational anti-avoidance law that we passed three years ago has resulted in large technology companies paying more tax. Now we want to improve these laws and increase the repertoire we have to deal with this issue.

Tax evasion is a lot like climate change: it's very hard to solve without some form of global compact or agreement. We can, of course, put in place tough measures at home, and that's what we've been doing over these last few years, and that's what this bill does. But we've also sought to work with our global counterparts through the OECD and the G20 on what's known as the base erosion and profit shifting, or BEPS, regime, because we understand that, although we can do a lot domestically by ensuring that companies that want to do business in our country pay their fair share, there's also a balloon effect where, even if we are very good at doing that, we also need our partner jurisdictions to do what they can because so many of these businesses are, of course, global organisations. BEPS is considered to cost governments across the globe at least $100 billion a year in forgone tax revenue. This is revenue that should be collected by governments and, obviously, used to pay for programs that governments provide. The G20 finance ministers have been working with the OECD to develop this plan for some years. The action plan has been well known, and we have been a key jurisdiction in driving that. Schedule 1 of this bill deals with action 4 of the plan, which is about limiting base erosion involving interest deductions and other financial payments. Schedule 2 deals with action 1 in that plan by looking at the tax challenges of the digital economy.

I might step through these measures in a bit more detail. In relation to thin capitalisation, effectively this bill says there will be tighter asset valuation rules and retains three avenues for genuine commercial debt. There is the safe harbour, the arms-length test and a worldwide gearing ratio test. In relation to hotels, this bill will ensure that offshore outlets that are provided access to Australian hotel rooms and like must charge the goods and services tax. From 1 July this year, organisations like Expedia will be captured by this bill, where they have a GST threshold of more than $75,000. This, of course, is one of the many measures we are taking in respect of the digital economy. I'd like to commend my counterpart, the assistant minister Senator Hume, for all her work in and around financial technology, open banking and the like.

We have a view that it's very important to look carefully at all the issues that arise with a digital economy and basically respond to changes in the marketplace as they occur. Whilst it may have been the case that we could see dust gather on the statute books in past decades, in the fast-changing digital space—and this is one example—we are always prepared to move as quickly as we can. I think it's fair to say that parliaments are often slower than the marketplace but, given the volume of legislation coming to this place, we are building a really strong agenda addressing the challenges of the digital age. A lot of the issues falling out of the Hayne royal commission, which will be dealt by this parliament in due course, certainly relate to digital issues. No-one could accuse us of sitting on our hands on these issues.

Finally, the bill deals with the issue of the luxury car tax. We are trying to meet our trade obligations, which we always seek to do. Unlike the Labor Party, we actually do trade deals. We aren't caught by ideology. We write our own policies, and we are prepared to take on a very robust trade agenda, one that has seen Australia do trade deals with a whole range of bilateral trading partners across North and South Asia in this period of coalition government. Also, of course, we have committed ourselves. We have delivered the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and we're seeking now to deliver the RSEP trade deal. So whether it's a bilateral or a plurilateral trade deal, the coalition government has got the wherewithal to push these through to a conclusion.

In summary, I would say again that this is a good example of the coalition putting in place a strong foundation in our budget. We actually believe that large companies, small companies and workers should all pay their taxes. We have put in place tangible measures over the course of this period of coalition government to ensure that multinational companies are paying their fair share of taxation. It is not fair for this parliament to give a waiver to a large company, be it an Australian company or a multinational company, in respect of their taxation. We expect all businesses that do business in this country to pay their fair share of tax, and we are always looking to tighten the rules to make sure there is no room for tax evasion. This issue of taxation evasion is like climate change: it is a difficult issue to solve on our own. That's why we've always sought to try to work with our international partners through the G20 and the OECD to try to stop base erosion and profit shifting where multinational companies use accounting tricks to avoid paying taxation where they are doing business. This again is another practical measure in line with the BEPS action plan. I commend this bill to the Senate.