Tuesday, 10 November 2015
Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015; In Committee
I would like to speak to the two Greens amendments before the Senate tonight. The second amendment is schedule 1 before item 5; the third amendment is at the end of the bill in clause 2 and that is the better targeting tax transparency. The first one is around consolidated accounts.
I understand that Senator Xenophon has an amendment that is very similar to our amendment on consolidated accounts. It is clear from the second reading speeches that the philosophy and the policy intents are very similar, but the difference is that we would like to have a threshold of $500 million to bring this in. From my understanding, I do not think it is so difficult for the government to enact this legislation. If the amendment gets up, and I certainly hope that it does, it is a very reasonable way to increase exposure and disclosure, as I said before, by looking at the loopholes.
I would call the special purpose entities and the special purpose accounts that they use a loophole. They apply to ASIC. As we heard in quite a bit of evidence in the Senate committee, they do not have the highest levels of disclosure. In fact, they have very low levels of disclosure. We heard of a lot of examples where this has been used. It quite shocked those on the committee that some very big companies were not disclosing tax at all. I remember being there when Greg Medcraft and ASIC were asked directly about this at estimates as well on numerous occasions.
It is up to us here to propose that this loophole—I will call it a loophole—be closed. No doubt it was put in place originally to lower requirements for corporations. I am trying to think of some of the reasons that it might have been allowed. No doubt we—we being the collective parliament—were lobbied, or someone in government was lobbied about red tape, equality, comparisons with other tax jurisdictions, because these kind of things might put off investors in this country. I would be quite happy for the minister to explain, if he could, why these special purpose entities and special purpose accounts were set up in the first place.
I thank Senator Whish-Wilson for his contribution. The government does not support this amendment or the amendment circulated by Senator Xenophon. This is not a loophole. Imposing a requirement that an entity must prepare general purpose accounts would be, in our judgement, an excessive compliance burden, because much of this information would be utterly irrelevant for tax compliance purposes.
The commissioner already collects a significant amount of information that relates to taxpayers on the tax return form. To the extent that more information would be helpful for the commissioner to independently administer the tax law: he already has very broad powers to require this to be produced and he can obtain that information. The commissioner already has sufficient and significant powers under his general information gathering powers. The commissioner can already require further information to be included on the income tax return to the extent that it is useful for tax compliance purposes.
The key difference between the general purpose accounts and the special purpose accounts is that additional information on related party transactions is provided. This information is already available to the commissioner, as it is disclosed in the international dealings schedule attached to the income tax return. Let me just say that again very slowly: this information is already available to the tax commissioner as it is disclosed in the international dealings schedule attached to the income tax return.
The proposed country-by-country reporting standards already provide detailed information to the tax office on international profit-shifting. Nothing further would be gained by requiring an entity to prepare another set of general purpose accounts. General accounts would only reveal Australian entity information, so what you are proposing does not go as far as what is already in train. The draft country-by-country rules go further and require accounting information from all the entities in a multinational group. The country-by-country legislation is already best practice and consistent with OECD best practice for mandatory transfer pricing information to be provided to the tax office.
The OECD debated whether to make country-by-country transfer information public. It was determined that this should not be made public. Doing this for tax purposes would go beyond best practice and, as such, the government is not going to support this proposal by the Greens and Senator Xenophon.
In relation to the general discussion about this bill and the amendments and the contribution made by Senator Whish-Wilson, does Minister Cormann agree that general purpose financial reports provide more information? I have in front of me the Statement of Accounting Concepts SAC2: Objective of general purpose financial reporting, which is prepared by the Public Sector Accounting Standards Board of the Australian Accounting Research Foundation and by the Accounting Standards Review Board. The statement defines a 'general purpose financial report' as:
… a financial report intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy, specifically, all of their information needs;
In contrast, special purpose accounts reporting is much more constrained. It gives next to no information about a company. It may just give their revenue for the year. It gives a paucity of information. General purpose accounts are not onerous. They are equivalent to the information that a publicly listed company provides to the ASX.
What I can say to Senator Xenophon is that the government does not agree to the imposition of additional red tape which imposes additional costs without delivering an additional benefit.
The global expert, when it comes to the appropriate policy frameworks and standards for taking effective action against multinational tax avoidance, is the OECD. Indeed, a former Labor Assistant Treasurer, David Bradbury, the former member for Lindsay, works in that part of the OECD these days, reporting to Pascal Saint-Amans. What this government is doing is following international best practice as set out by the OECD.
This exact point that Senator Whish-Wilson and Senator Xenophon are putting on the table was carefully considered by the OECD. The OECD, in our view for good reasons, made a judgement that it would not be appropriate or consistent with best practice to require the publication of this sort of information. As I said in my response to Senator Whish-Wilson, this does not provide additional information for tax compliance purposes that the tax commissioner cannot already get or does not already obtain through the income tax return or the associated schedules. This is essentially just imposing an additional compliance burden and an additional cost for the sake of it. Australia has to watch its international competitiveness. We should not just willy-nilly impose additional costs on business for the sake of it when it does not add value, and we certainly should not be doing it outside the well-considered framework of international best practice as laid out by the OECD. For these reasons the government will not be supporting either Senator Whish-Wilson's or Senator Xenophon's amendment.
) ( ): Can the minister explain why big companies like Glencore, with $35 billion worth of assets, apply for special purpose accounting, and does the minister accept that there is a role for forensic accounting and a public interest in having these accounts available? I understand you can go to where these corporations are domiciled or registered and the accounts have to be released, but why do they apply through subsidiaries in other countries to have minimal disclosure in their accounts?
) ( ): I am not going to discuss the individual tax affairs of individual taxpayers—that would not be appropriate. Senator Whish-Wilson talks about forensic accounting and asks whether I support that. I support the system that we have in Australia where the tax commissioner independently administers and enforces compliance with our tax laws. I think that that independence is very important indeed if people are to have confidence in the integrity of our system. I do not think we want to politicise the administration of our tax laws, and I think the tax commissioner ought to have the powers—and the tax commissioner has the powers—that he needs to ensure that those businesses generating profits in Australia, including multinational businesses, pay their fair share of tax here in Australia consistent with our laws.
Of course the bill that is in front of us is a significant step forward because it will give the tax commissioner additional powers. It will enable the tax commissioner to see through any contrived arrangements where a multinational company is seeking to avoid paying tax consistent with our laws here in Australia by taking advantage of those contrived arrangements. The Senate should support this bill unamended. We should not go down a path which all of the international experts have considered carefully and said is not the right way to go.
If we can go back to the question I put to the minister a few minutes ago, in terms of general purpose financial reporting, the information provided—what is proposed in my amendment and in the amendment to be moved by the Australian Greens—is effectively the sort of information that you would see in a publicly listed company in this country. In other words, the first direct question to the finance minister is that what is being requested here is no more and no less, effectively, than what public companies have to provide to the ASX. With my proposed amendment, if you are part of a company that has $1 billion a year revenue, then that will be not be onerous. My second question is that the minister says the information is already provided to the Australian Taxation Office—that is my understanding of how he responded to a question from the Senator Whish-Wilson—so how can it be an additional cost of compliance to file it with ASIC, for instance, or for it to be made publicly available?
This is a tax integrity bill. What we are focusing on here is making sure that the tax commissioner has the powers that he needs to enforce compliance with our tax laws. What I said very clearly in response to Senator Whish-Wilson was that a requirement that an entity must prepare general-purpose accounts would be an excessive compliance burden because much of this information would be utterly irrelevant for tax compliance purposes and all of the information that is relevant for tax compliance purposes can already be obtained by the tax commissioner.
Minister, you keep talking about the tax commissioner having the powers they need—putting aside whether they have the resources. Isn't the issue not necessarily that they have the powers to chase corporations who might be minimising or avoiding their tax but detection in the first place? Isn't it about having the information available? Especially for an office that is under pressure and that has lost so many of its staff over the years, isn't the issue that this information is available to the public and for forensic accounting, and it would actually be reverse red tape—it would give all of us the information we need. There is a really good forensic accountant in Tasmania who does just about everyone's work for them on a volunteer basis, not to mention the ones within professional organisations. This would open it up so that we could all help deal with this problem.
The problem, as I highlighted in my speech on the second reading, and which was very obvious in the Senate inquiry, is that the tax office has been shredded by the minister's government—4,400 jobs have been cut from the tax office, and the minister is here tonight telling us that all the commission needs is powers. Fine if the commissioner gets those powers when they need them, but you have to detect the avoidance in the first place. You have to have the resources and the ability to detect things before you can prosecute a case or hold these corporations to account if they are avoiding tax. This is about having the information available so that detection can occur, and that is what this amendment is about. I would have thought it was a no-brainer.
Firstly, I completely reject the assertions that Senator Whish-Wilson made about a shredded tax office and the tax office being under pressure. It is true that the previous Labor government imposed an efficiency dividend on the tax office which led to a reduction of about 3,500 ASL positions. It was quite appropriate for the previous Labor government to do that because in the 21st century, in 2015, the administration of our tax laws is not the same as it was 20 or 30 years ago
It is not paper based in the same way. There are more sophisticated compliance mechanisms and tools available these days. Of course, the tax office will continue to be at the global leading edge when it comes to pursuing, implementing and administering our tax laws in a modern and efficient way—and they are doing a great job.
Specifically in relation to international tax avoidance, the government has provided an additional $87.6 million to the ATO over three years to investigate international tax avoidance. To date, the program has raised over $400 million in tax liabilities, and it is estimated to raise about $1.1 billion in total. This suggestion that we are not resourcing the tax office appropriately is wrong. Even if Senator Whish-Wilson's assertion were right, it does not link at all with his final sentence in support of his amendment, because, as I have indicated before, his amendment and Senator Xenophon's amendment do not add anything when it comes to providing information to the tax office, because the information required for tax compliance purposes is already available and within reach of the tax commissioner.
I can agree to disagree with the finance minister in relation to this. I think the best thing to do now is to move the amendment standing in my name. I move amendment (1) on sheet 7789:
(1) Schedule 1, page 7 (before line 10), before item 5, insert:
4A After section 3C
3D Reporting of information about significant global entities
(1) This section applies to a corporate tax entity for an income year if the entity is a significant global entity (within the meaning of the Income Tax Assessment Act 1997) for the income year.
(2) The entity must, as soon as practicable after the end of the income year, give the Commissioner a general purpose financial report for the income year.
(3) For the purposes of this section, a general purpose financial report must be prepared and audited in relation to the entity in accordance with:
(a) accounting principles and auditing principles; or
(b) if such principles do not apply—commercially accepted principles, relating to accounting and auditing, that ensure the statements give a true and fair view of the financial position and performance of that entity (or that entity and the other entities on a consolidated basis).
An expression used in this subsection that is also used in the Income Tax Assessment Act 1997 has the same meaning as in that Act.
I have spoken about this amendment in the context of the second reading contribution. This relates to the reporting of information about significant global entities. It applies to a corporate tax entity for an income year if the entity is a significant global entity—that is, an entity that has revenue of $1 billion a year or more in terms of its global operations. It would also apply to an Australian based company if it has that revenue of $1 billion a year or more, and it mirrors the definitional framework in the government's own bill in this regard. If a company is an Australian based company and has a revenue of $1 billion a year or more, then it ought to be big enough and ugly enough to provide these accounts.
I do not buy the arguments that I reluctantly accepted that relate to companies of $100 million or more in terms of being part of a supply chain arrangement with Coles or Woolworths. Once you get to $1 billion, there cannot be any question of the ability to provide general purpose accounts rather than special purpose financial reports, which are scant in their detail. This would apply to companies such as Apple, Microsoft and Google. These companies ought to be able to provide general purpose accounts to the same level of detail that a publicly listed company, which may be much smaller, would give to the Australian Securities Exchange. They would be readily available information. That is why I commend this amendment. I know the Australian Greens have a similar amendment, but its threshold is lower at $500 million.
Labor will be supporting the amendment that has been circulated in the name of Senator Xenophon. We believe that the measure and this idea about greater disclosure does have an important role in making sure there is greater tax transparency and in resulting in better tax outcomes. I note that there is a similar amendment from the Australian Greens party. We believe that the threshold of $1 billion being proposed in the amendment by the Senator Xenophon is a reasonable amount and a reasonable threshold.
A lot has already been said in this chamber tonight about a special purpose approach by accountants and large firms. I do not believe too much more needs to be added to that. But it is worth noting that this is a tactic that is increasingly employed by large firms so they are able to structure themselves in such a way as to minimise their disclosure obligations. I think this is an important loophole that can actually be closed by going through this process. I also want to commend and acknowledge the work that journalist Michael West—whom others have made reference to tonight—has done in this space in highlighting this.
As I have said in this chamber before, we should not kid ourselves that global multinational tax minimisation is a cat-and-mouse game. It is the responsibility of parliaments like this parliament to create new rules to close loopholes. Of course, from time to time we have to be prepared to revisit laws and ideas and come up with new approaches. Again, I think this improves what is already a good bill, a bill that warrants the support of this Senate. I think this is just another addition and another measure that is worthy of that support. The Australian Labor Party will be supporting it tonight.
Given that Labor have now declared their position in relation to this amendment, let me just place on the record that Labor, tonight, are helping to delay effective action against multinational tax avoidance. If this amendment gets up, what it will mean is that this very important piece of legislation which will give the tax commissioner significant additional powers to fight multinational tax avoidance consistent with international best practice will not pass the parliament and will have to come back to the Senate down the track. If this amendment gets up, it means that the Labor Party has put themselves on the side of multinational tax dodgers.
That is what Senator Dastyari has flagged. This is where he has put the Labor Party, because, presumably, I am sure that this is not a decision that was made by the leader of the Labor Party. I am sure that this is another Senator Dastyari special.
Here is the Labor Party trying to impose an additional bit of red tape which makes not one iota of difference when it comes to fighting multinational tax avoidance. They are putting at risk the efficient and speedy passage of legislation that does make a difference.
The only risk is you!
The CHAIRMAN: Order! We are in committee. Senators have multiple opportunities to contribute to the debate, and they should do so when they have the call and not via interjecting. Minister, you have the call.
Tonight, Labor, led by Senator Dastyari, have put themselves on the side of multinational tax dodgers by working hard to delay the passage of legislation which will help the government and help the tax commissioner more effectively fight multinational tax avoidance by giving him the powers he needs—I am just putting that on the record. So the Senate might want to reflect on that as we consider a vote on this amendment and on the Greens amendment in relation to this bill.
What an extraordinary display from the minister. The notion that simply supporting measures that improve the legislation and create greater transparency will put at risk a giant multinational tax avoidance bill by this government is a demonstration of what a cop-out position this government is intending to take. Let's be very clear. If this amendment is supported by the Senate, the Senate tonight can, should and, I suspect, will support the bill as a whole. If the government chooses not to support its own legislation because steps have been taken to improve it, that will highlight—it will put in neon lights—what a cop-out, pathetic, weak, embarrassing position this government is prepared to take.
This amendment by Senator Xenophon will improve the bill. It deserves support. We have said from the start that we do not believe this bill is perfect. In many areas we do not believe it goes far enough, but it is a good set of measures. It is a disgrace, a disappointment and a cop-out that the government is trying to hold to ransom the political parties and Australian taxpayers by these kinds of tactics. Senator Xenophon should be commended on an amendment that will improve this bill. I know the Australian Greens plan to move a similar amendment with a lower threshold. Those of us on the Labor side of politics believe that $1 billion is a better threshold than $500 million, but, to be honest, they are very similar amendments—the $1 billion threshold is a just a judgement call that has been made on our side of politics. If the government is prepared to not support its own legislation because it has been amended to include measures to improve transparency—wow—that would say a lot about this government.
It is a bit like groundhog day in here, and Senator Cormann is Punxsutawney Phil. I have been here before with you, Senator Cormann—when we moved to extend unfair contract term provisions to small business, you stood up and said the same thing in the Senate. You threatened us and said, if our amendment got through, the whole bill would collapse and, therefore, we would have it on our consciences that we had turned down a perfectly good bill for small business. In the end, we went through with it, we got our amendment up, it went back to the House, they accepted the amendment and we have much better legislation. Our job as senators here in the Senate is to improve legislation and to debate these issues. To stand up, threaten us and say we are on the side of multinational corporations is, quite frankly, immature. We have had a good level of debate tonight. We have all been very reasonable and very measured in what we have said.
I want to make a point that is really obvious to me. The whole reason this thing has come into the public domain—the whole reason, as I said in my speech to the second reading debate, that this bill has even come to us and we are here tonight debating it—is that there has been sunlight shone on this subject, especially recently by journalists. The consequent public concern is a matter of significant interest. The ATO have been sitting on these special-purpose accounts, and what have we seen from them in the past around multinational tax avoidance? The efforts that they have taken recently started around the Senate inquiry, this developing public interest and the fact that the media is out there doing the investigative journalism and exposing these kinds of things.
To say that a requirement for general purpose accounting is going to be counterproductive and that we are on the side of multinational tax avoiders is actually a pretty stupid thing to say, with all due respect. We are trying to improve the legislation. We have a good idea. Let's not be combative and divisive in the politics around this. If you do not want to accept the amendment tonight and it is passed, take it away and have a good look at it. You will see that it makes common sense and that it is not a red-tape issue. This is about having information—with information, we can make good decisions. As the Productivity Commission always says, transparency should be in our genes.
The Greens will be supporting Senator Xenophon's amendment, but that will not stop us moving our amendment as well, because we believe this kind of accounting should apply to entities at a much lower threshold than $1 billion.
I just want to acknowledge that Senator Cormann is one of the smartest people in this place. He is highly capable, is highly competent and has a lot of integrity—which is why I am shocked that he put up that argument. It is a very weak argument. It is a farcical argument. To suggest that anyone who supports this amendment—the Labor Party or, indeed, by extension, I as the mover of this amendment or the Australian Greens—is somehow siding with multinational tax avoiders is completely offensive and repugnant. Let us put this in perspective. The only way that this amendment will slow down this bill is if the federal government is not fair dinkum about tackling multinational tax avoiders. I know that the former Treasurer, Joe Hockey, was. I took him on his word. He talked the talk and walked the walk by introducing this bill. To suggest that supporting this very straightforward measure is somehow siding with multinational tax avoiders makes no sense whatsoever. So, for the people out there who are listening on the parliamentary news network or on news radio, it is completely farcical—what the finance minister has said.
Let us put this in perspective. Let us recap. What I am suggesting with this amendment, which mirrors the Australian Greens' amendment, which has been supported by the Australian Labor Party, is that if you are a company that has a global revenue of a billion dollars a year or more then it is not unreasonable to request that that company provide what is known as general purpose financial reporting, set out under Australian accounting standards and public sector accounting standards. It will require, in essential terms, the same level of information that a publicly listed company in this nation has to provide to the ASX and to ASIC. What it will require is a measure of transparency for those companies, already provided by much smaller public companies in this nation which may have a fraction of the revenue of a billion dollars a year but which are able to provide this information quite readily. It will provide a whole range of information, including transfer pricing. It will provide all sorts of information, including the intricate, labyrinthine arrangements that some of these companies are involved in. So all I am asking with this amendment is to have a similar measure of transparency as that already required of publicly listed companies. And what is the threshold? A company with revenue of $1 billion a year or more, whether in Australia or globally. To suggest that those companies somehow are going to find that onerous—I do not think there is a violin in the world small enough to play to say that that argument has any validity! That is what I am saying. Again, I say it with genuine respect for the capacity and the intellect of the finance minister. But this argument does not wash. It is an absolute furphy. And I would urge my colleagues to support this amendment.
The CHAIRMAN: The question is that amendment (1) on sheet 7789 moved by Senator Xenophon be agreed to.
Having listened to the evidence, with the view that we may not have support for our amendment—but we did support Senator Xenophon's amendment—I now move Greens amendment (2) on sheet 7787:
(2) Schedule 1, page 7 (before line 10), before item 5, insert:
4A After section 3C
3D Consolidation of accounts for entities with total global revenue of $500 million or more
(1) This section applies to an entity for an income year if the entity has total global revenue equal to or exceeding $500 million:
(a) if the entity is a member of a group of entities that are consolidated for accounting purposes as a single group—as shown in financial statements prepared and audited in relation to all members of the group; or
(b) otherwise—as shown in financial statements prepared and audited in relation to that entity.
(2) The entity must, as soon as practicable after the end of the income year give the Commissioner general purpose financial statements for the income year for:
(a) if paragraph (1)(a) applies—the group of entities consolidated as a single group; or
(b) if paragraph (1)(b) applies—the entity.
(3) For the purposes of this section, financial statements and general purpose financial statements must be prepared and audited in relation to the entity in accordance with:
(a) accounting principles and auditing principles; or
(b) if such principles do not apply—commercially accepted principles, relating to accounting and auditing, that ensure the statements give a true and fair view of the financial position and performance of that entity (or that entity and the other entities on a consolidated basis).
(5) In this section:
accounting principles has the same meaning as in the Income Tax Assessment Act 1997.
auditing principles has the same meaning as in the Income Tax Assessment Act 1997.
Labor will not be supporting this amendment. I note that we did support a very similar amendment in the name of Senator Xenophon moments earlier. The only real material difference appears to be a threshold of either $1 billion or a $500 million threshold. Labor feels that the $1 billion threshold is a more reasonable one than the $500 million one, but we note just how similar these two amendments are.
The CHAIRMAN: The question is that amendment (2) on sheet 7787 be agreed to.
Before I move amendment (3), which concerns better targeting tax transparency, I think we need to be very clear about some of the information and some of the reasons why some senators in the chamber may not support this Greens amendment. In our speeches on the second reading we have already gone through the fact that when this legislation came previously the speaking list collapsed for various reasons, it did not go to a division, we did not have adequate debate, and a number of stakeholders were quite disappointed.
We are glad that tonight we have had a chance to debate the issues around this, not just because we missed out before, but, because we had new information that came to light. That information was basically that we had been 'astroturfed' by a front organisation that appeared during the committee process, and senators themselves have admitted it had an impact on their decision when we voted on the last piece of legislation.
As Heath Aston described in an article recently, astroturfing in American politics is:
… the use of artificial grassroots to create an impression of widespread support for a particular political agenda.
Astroturfing can take many shapes but at its most basic the process enables already powerful interests to 'counter-mobilise against regulation' …
As one example. We think we have seen a very clear example of that. Here is an opportunity for senators to take some new information into account in relation to how they vote on these laws tonight.
These laws are different because they relate to a $100 million threshold for businesses and for individuals. Once again, the principle is very simple. It is that same as we discussed earlier in relation to the legislation around a $1 billion limit. It is all about transparency and it is about disclosure.
Senator Xenophon has been very open about his concerns. He has spoken to a couple of businesses that are concerned about their competitive position. They compete against Coles and Woolworths, the duopoly. There is no doubt that Senator Xenophon has done an enormous amount of work trying to help small and bigger businesses, but I would not say that $100 million is a small business—in fact it is an enormous business. I understand also that Senator Muir has spoken to some car component manufacturing companies that have lobbied him about not wanting to see these disclosure laws, because of competitive pressures. Let me say that for $38 a competitor can go to ASIC and get the same information. So, in the competitive dynamic world that we all know these businesses compete in, the information is available anyway. All this does is make it compulsory to put that information up on a register, so if someone wants to find your data and your information they can get it by applying to ASIC.
The argument is that, somehow, a couple of special interests, and I am guessing that it is only a few, could railroad this amendment tonight on the back of some legislation that is significantly in the public interest. Whether we are dealing with a front group that is astroturfing on behalf of some wealthy individuals, or whether it is a couple of businesses with genuine concerns around their competitive positions, we as senators need to weigh up their special interests against the public interest. This is that public interest measure, and the coalition—whether it is the Tax Justice Network or the other groups that have brought this to our attention—is very broad. I do not think that there is a single Australian out there, apart from the ones who are worth more than $100 million, who would oppose this legislation tonight if you actually put it to them in a sensible and balanced manner.
Senator Canavan interjecting—
Maybe some Tories would possibly, Senator Canavan, even if they were aspiring to be worth $100 million. Perhaps you are right. I forgot about the aspirationally wealthy in this country. The idea is that most of them would probably be good, honest, hardworking people, even if they are wealthy, and should not have an issue with having their tax disclosure in the public realm. I would ask senators to consider this. Senator Xenophon, I ask you to consider your position. This is a matter of significant public interest, and I do not think that we should let this legislation go down tonight because of the interests of a couple of corporations, no matter how well meaning. This is an opportunity for us to continue strengthening laws around disclosure and around potential tax minimisation and tax avoidance, and I urge the Senate to support the Greens amendment tonight.
I move Greens amendment (3) on sheet 7787:
(3) Page 17 (after line 3), at the end of the Bill, add:
Schedule 5—Repeal of the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015
Part 1—Repeal of Act
Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015
1 The whole of the Act
Repeal the Act.
(1) This item applies if the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015 receives the Royal Assent before this Schedule commences.
(2) Despite section 7 of the Acts Interpretation Act 1901, the Taxation Administration Act 1953 as in force immediately before that Royal Assent continues to apply, by force of this item, as if the amendments made by the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015 had never been made.
The government will not support this amendment. In fact, we oppose this amendment. On 15 October 2015, parliament passed a bill to amend the legislation which previously directed the Commissioner of Taxation to publish confidential tax information of Australian controlled private companies. The government introduced that amendment because publication of the taxation information of these companies would have, effectively, disclosed the owners' financial affairs and posed a risk to their position in the market by making key economic information available to their competitors and suppliers.
It is important to note that the amendment has no impact on the comprehensive powers of the Commissioner of Taxation to require companies to produce any information that is relevant to making an assessment of their tax liability—powers he already has. The public disclosure of tax information law will continue to apply to multinational enterprises operating in Australia and to Australian public companies. The government has made clear that every company—indeed, every taxpayer—must pay the right amount of tax. To that end, it has tightened the thin capitalisation laws applicable to the amount of interest that may be deducted and has introduced new legislation to tackle tax avoidance by large multinational groups—specifically, the bill that is being considered by the Senate today.
Given that Senator Whish-Wilson has suggested that the reason for this amendment is that he feels misled by the so-called Family Office Institute Australia, there are a number of much more senior and very reputable organisations that have advanced the same arguments. Just because there is a question mark over the credibility of an organisation pursuing a particular argument does not make the argument wrong, particularly when you have the Law Council of Australia and PwC supporting the amendments that the government has made to the legislation and which Senator Whish-Wilson is seeking to reverse.
We do not support this Greens amendment for the reasons that we have outlined. This bill will have to come back before the Senate and the Senate will have to make a judgement on whether it wants the tax commissioner to have additional powers to enforce tax compliance by multinationals and, essentially, to ensure that we have better powers for the tax commissioner to prosecute multinational tax avoidance more effectively. The amendments that have been passed and that are now being flagged in relation to this particular measure will delay the implementation of this legislation which, of course, significantly boosts the powers of the tax commissioner to take effective action against tax avoidance. The Senate has to be very conscious of the fact that we will have to deal with this legislation again, when we could be getting it onto the statute books much more quickly and much more efficiently.
I would like to add my contribution to the debate by saying that I have never before in my life heard anything so preposterous as the reason being put forward to oppose this amendment—except that I have. About 10 or 15 years ago the Greens, the Democrats and Labor put up amendments to ensure that companies were required to disclose the salaries of their chief executives and top five or 10 employees so that shareholders knew. Do you know what the argument was all those years ago? There will be mass kidnappings! After 15 years or so of this debate, Senator Muir, I can promise you that there have been no kidnappings. I can promise you that if you have fallen for this, I have a Harbour Bridge I would like to sell you! Seriously, this is the same rubbish they trotted out to protect their corporate mates 15 years ago. Tragically, I have now had to listen to this twice.
I would say to Senator Muir, Senator Xenophon and other crossbench senators who are accepting these arguments that last time a majority of the Senate said, 'We don't believe you,' and we supported and moved an amendment that gave shareholders an opportunity to know what was being paid to their chief executives. This was fought by the Business Council and the big end of town and they kicked and screamed. And guess what? They have been at it again. They have even bothered, in the digital age, to set up a couple of fronts—what a classic—to pursue their interests. This should be seen for the fraud that it is in terms of the activity of pretending that there is a groundswell of support opposed to disclosing this information. This should be seen as a 'fraud for kidnappings'. Fair dinkum. I am not joking. They actually used kidnappings 15 years ago and, fortunately, the crossbenchers at the time did not fall for it. So I urge those of you who have been involved in this debate: please do not fall for it again. Do not fall for this. This is complete rubbish designed for one purpose and one purpose only: to continue to conceal valuable information that allows the public to make judgements.
The mob on the other side thinks it is okay to put your assets in companies through the Cayman Islands, like Mr Turnbull puts his assets through the Cayman Islands and then wants ordinary Australians to pay a GST on food at 15 per cent. What an outrage. They want to protect their mates at the big end of town 10 times out of 10. They will not do the job of fixing the revenue base in this country. They will not do the job. They come up with mealy-mouth legislation, they cannot give a forecast of how much money they will actually get and they want to come in here and then try to make Australians pay a tax on food—a GST of up to 15 per cent. How about we start getting some honesty in the tax system? How about we start getting some disclosure in the tax system so that Australians can judge who is paying their fair share—whether Australians think it is okay to run your assets through the Cayman Islands, whether you are a company or Mr Turnbull, or you have to pay—
Mr Chairman, I rise on a point of order. Senator Conroy is adversely reflecting on the Prime Minister. The Prime Minister has publicly made very clear that he pays tax on all of his income in Australia and, like many industry funds, some of the funds in which Prime Minister Turnbull is invested are based in the Cayman Islands. In an abundance of caution to avoid risk of conflicts, most of his funds are invested overseas. Australian Super, I suspect, is invested in funds through the Cayman Islands. In any event, there is an adverse reflection on Prime Minister Turnbull by Senator Conroy which I would ask him to withdraw. There is an adverse reflection—a suggestion that somehow Prime Minister Turnbull is not complying with his tax obligations in Australia when he has already made very clear that he pays tax on all of his income here in Australia.
On the point of order, I can understand why those opposite are a little sensitive about a Prime Minister who runs his assets through the Cayman Islands. I can understand that. I would be sensitive about it if I got tumbled. I would be very sensitive about it. I am not suggesting any illegality. So, on the point of order, I am simply pointing out an agreed fact: Mr Turnbull has his assets run through the Cayman Islands. If you want to imply that there is a problem with him doing that, I am happy to take your imputation, but I simply stated that that side of the chamber are happy to let Prime Ministers and companies run their assets through the Cayman Islands. It is a statement of fact. You are happy about it. So, on the point of order, I ask you to dismiss it as there is no point of order.
The CHAIRMAN: That is right. That probably takes us back to where we started. I was listening. I did not think that there was an adverse reflection, but I understand what you have said, Minister, and I am happy to look at the Hansard and review that position. I do remind senators that, when referring to members, they should pay the proper courtesies and respect to them.
What we are seeing is a government that is very sensitive on these tax matters. It does not want to reveal information to the Australian public to allow them to make a judgement about whether a tax package coming into the future can be fair. That is what goes to the heart of this debate: fairness and whether the Australian public have all the facts they need—whether your constituents, Senator Muir, whether your constituents, Senator Xenophon, or whether your constituents, Senator Madigan, know the truth. When they have all the facts—not hidden or disguised—they can make a judgement on whether they should pay a 15 per cent GST, because some people have tax affairs they would rather have hidden. I can understand the Prime Minister being sensitive. He runs his assets through the Cayman Islands. It is just a fact. I do not think it is appropriate and I do not think it is appropriate for super funds.
Government senators interjecting—
I am happy to take that all on as part of getting it fixed—fix that; fix this—and then the Australian public can genuinely make a judgement about whether they should pay a 15 per cent GST or a GST on food. What could be simpler than asking for information? It is just like when this parliament and this chamber bravely said, 'We don't believe the Business Council. We don't believe all those business groups who have knocked on our doors worried that their chief executives are going to have their children kidnapped.' It is just like that was not supported by any facts, including from the police or anybody else in the inquiry that went into this. Do not fall for it. The Liberal Party—it is in their DNA—want to put a GST on food and they want to try to create an argument about why Australians need that. I am up for the debate. I have been through it once before. There are not many of us. I think I am the fourth-longest-serving senator for my sins, and there are many! I am sure there is unanimous agreement on that part. I think that only Senator Heffernan's sins can exceed mine. But for my sins I have lived the GST debate before and I know all the arguments that will come forward. Let's get the truth and the facts on the table. Do not fall for the line that there is a problem with this information being disclosed. There is not. Senator Xenophon, I was hoping that you would reconsider. Senator Madigan, I know you were undecided last time, and there was confusion in the chamber. I believe that that vote should have been recommitted to allow you to express a view one way or the other. But due to the timing of that vote—when it went through—you never got a chance. If you had said 'no' back then, this amendment would not have been necessary today. If you felt that that disclosure was appropriate last time—even though we are probably still going to lose—I would urge you to follow your conscience on this.
I believe, deep down, that you believe Australians should know this—particularly if they are going to have a GST foisted on them. They should know who is paying tax and who is not paying tax. They should know who is running their assets through the Cayman Islands. They should look at the report that has come out today. I urge every crossbencher to look at this report produced by Oxfam, Tax Justice Network and those organisations who have identified companies that have $2 billion of assets running through the Cayman Islands, through the Singapore tax havens and through all the other tax havens to avoid paying tax in this country. Tragically, I studied tax economics at university.
An honourable senator interjecting—
I know; it is very sad. The fundamental principle is: you should be taxed where your economic activity takes place. That is like an economic principle: if you earn your money here, you should pay your tax here. This week, even James Packer called for companies to pay the true amount of tax. We all know what Mr Packer's dad famously said: 'You should pay as little as possible.' Today, Mr Packer thinks that Australian companies are not paying their fair share, and many of us in this chamber would agree with that.
Mr Chairman, I rise on a point of order going to relevance. We have let Senator Conroy go for some time, here. He is now drifting into areas that have nothing to do with the particular amendment being debated before you. On relevance, I ask you to bring him back to the question before the chair.
The CHAIRMAN: I am satisfied that—
Honourable senators interjecting—
The CHAIRMAN: I have not ruled on the point of order yet. I was trying to, but I was interrupted.
Honourable senators interjecting—
The CHAIRMAN: I am ready to rule on the point of order. I am satisfied that Senator Conroy is actually building an argument, as broad as it might be, to support his argument on the amendment itself. I do not think there is a point of order.
I can understand why the mention of the words Cayman Islands sends a shiver down the spine—this is the party that wants to put a GST on food, and it is okay to run your assets through the Cayman Islands. I get it. I am absolutely outraged that you can all stand there and pretend you are taxing companies, refuse to disclose taxation receipts, rush bills through parliament at the last minute, and try and pretend with an asterisk—
I appreciate Senator Heffernan's intervention. It is always colourful, but it does not disguise the facts. Again, I urge Senator Muir, Senator Xenophon and Senator Madigan: if you have fallen for this line, the kidnappings will take place. Know that it is not true. Know that, 15 years after the business community claimed it last time, it was not true then and it is not true today. No submissions came forward to justify this bill at all, other than those put together by a digital front group. Senator Xenophon, I thought, perhaps, once you saw that you were taken for a mug at the inquiry you might have been willing to reconsider. You were all taken for mugs by a couple of—