Senate debates

Thursday, 13 September 2018


Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018; Second Reading

10:57 am

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | | Hansard source

This is a continuation of my contribution to the black economy discussion, as part of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 that's before us. This bill, as I indicated in my previous contribution, reflects two of the Black Economy Taskforce measures: electronic sales suppression tools and third-party reporting. These are issues that are becoming more important because of the expansion of the so-called gig economy, where working people are becoming more and more subjected to bad conditions outside of the award system or any agreement system, and the expansion of contracting to try to build a barrier between the employer and the employee so that the employer can simply say that the employer is not responsible for the workers who are doing the work to make the employer's business profitable. These are issues that have been concerning Labor for some time.

The issue of contractor tax compliance in the building and cleaning industry is really important. I'm involved in an inquiry into the cleaning contractors in the retail sector, where major companies like Woolworths—making billions of dollars of profit year on year from the Australian community—won't employ cleaners directly. Those cleaners are then subjected to contractors' pyramid subcontracting. Many of these migrant workers are being forced to work for $7 an hour under the guise that they are being trained. This is reprehensible conduct. The problem is that we have a government that are so divided that they can't focus on the issues for working people or the community in this country. They are so focused on their internal hatred of each other that issues like this do not receive the appropriate attention that they should.

The expansion of the taxable payments reporting system is a good thing. The measures before the chamber will see about $132 million of payments coming in over the forward estimates, with about $56 million of them going back to the states. But what we've seen in relation to the government's incompetence is that there was a $230 million discrepancy in the data that was provided for this bill because Treasury did not up upload the proper data into their analysis.

We take the view that this is a start. The Black Economy Taskforce looked at a massive range of issues. We agree that this is a start, and we will support this bill. I indicate that Labor will also be supporting the amendments from Senator Whish-Wilson and the Greens. We don't believe that enough has been done by government on the anti-money-laundering and counter-terrorism-financing area. More needs to be done in that area. But when you're too busy carving each other up, when you're too busy knifing your own leader, when you're too busy displaying your hatred for each other in the public arena day in and day out and when you're too busy bullying female coalition members to try to get the numbers to knock off a certain Prime Minister, is it any wonder that the important issues for this country don't get dealt with appropriately? That's exactly what we have. Is it any wonder that the now leader of this divided, decaying, decrepit government called his own members muppets? Of course they're muppets. We have the muppets sitting across here too busy fighting each other to deal with the issues.

What we need in this country is a government that can actually address the issues for workers in areas all over the country. If the black economy is working in cash-in-hand payments, employers who do the right thing cannot continue to be competitive. If there's underreporting of income, legitimate companies are put under pressure because they can't compete with the companies that are ripping off the tax department. If companies don't have proper records, or poor or false records, then these are issues that should be addressed by any government worth its salt. These are issues that have been raised in the Black Economy Taskforce. Phoenixing is when a contractor gets a contract with a company that goes bust the next day, and then the same people are sitting in the same building, at the same desk, under another name and ripping workers off. It's just not good enough. Sham contracting is forcing workers to take out ABNs when they are not businesses. There's underpayment and exploitation of workers. We had Senator Molan defending Woolworths at estimates the last time I was there. We had coalition senators defending multibillion dollar companies against cleaners. I think it says everything about this coalition. They are too busy defending their mates. They are too busy fighting each other to actually make this a better country. That's the problem we have.

ABN fraud and abuse are rampant, and this is one of the issues that was raised in the Black Economy Taskforce. Using interposed entities to avoid tax was also raised. These are all issues that we see reported in the Black Economy Taskforce, but what do we get? We get a couple of recommendations. One of the recommendations that the Black Economy Taskforce made was that this government should work with the trade union movement to try and deal with and identify some of the rorts that are taking place. But can you imagine this government working with the trade union movement? They are too busy funding the ABCC and the Registered Organisations Commission. They are too busy putting their own people, putting their mates, into these so-called independent bodies to attack the trade union movement. This government are a disgrace, an absolute disgrace.

We get this problem where they get so engrossed in attacking working people's representatives, attacking the people who actually increase wages and conditions for workers, that they just lose the plot. That's why we've got two recommendations in this bill when there should be a number, a raft of recommendations, coming through. The gig economy, contractors doing the wrong thing and businesses operating on a basis that undermines legitimate companies should all be dealt with. But this government, the muppets, the muppet show that this government is, just can't get their act together to deal with the issues. That's why there is no stability in the government. The government is absolutely unstable.

In the period 2013 to 2018 the Labor Party has had one leader and one deputy leader. What have we had with the coalition? We've had Prime Minister Abbott and Deputy Prime Minister Truss. We've had Prime Minister Turnbull and Deputy Prime Minister Truss. We've had Prime Minister Turnbull and Deputy Prime Minister Joyce. We've had Prime Minister Turnbull and Deputy Prime Minister McCormack. Now we've got Prime Minister Morrison and Deputy Prime Minister McCormack. Is it any wonder that in that period of five years this government could not get its act together in a whole range of areas? They are an absolute disgrace. They are a government that just can't get their act together—

Photo of Murray WattMurray Watt (Queensland, Australian Labor Party) Share this | | Hansard source

A rabble—

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | | Hansard source

I've just been reminded that they are an absolute rabble of a government—

Senator Brockman interjecting

No wonder you're laughing, because you know it's true. You know that you are a rabble of a government. The coalition is an absolute rabble. The National Party is a rabble. The Liberals are a rabble. The Liberal rabble doesn't like the National rabble and the National rabble doesn't like the Liberal rabble, and the Liberal rabble don't like each other. That's the bottom line with this mob. They are too busy attacking each other like a bunch of schoolkids to actually bring a bill here that deals with the rip-offs of taxation in this country, deals with the black economy and provides more tax, so that you can invest in schools, invest in health, invest in the community and invest in infrastructure. This government is so bad, so disjointed and so insecure that none of these big issues get dealt with.

It's about time that the people of Australia get an opportunity to make a decision about this rabble of a government. The sooner we get to an election the better. The sooner people can make a judgement about this new Prime Minister—who was at the heart of all of those changes in government and who defended the attacks on the Australian community in that first Abbott budget, attacking pensioners, reducing pensions, reducing the capacity for families to put food on the table and attacking young people who couldn't get a job—the better. The sooner that people understand that this new Prime Minister, Prime Minister Morrison, was at the heart of every one of the attacks on working families in this country the better.

Was this new Prime Minister, when he was Treasurer, prepared to deal with black economy issues? No. Was he prepared to deal with the banks, which are ripping workers off, ripping families off, ripping pensioners off and ripping disabled Australians off? No, he was not. On 26 occasions, he stood up and said, 'We should not have a banking royal commission.' Now that he is Prime Minister, he has changed his mind.

We know what this government will do. They will do the same as the John Howard and Peter Costello government did. When they're in trouble, they will throw money at every interest group to try to get a vote. We know the argument that they are good economic managers is an absolute myth. The eras when this country behaved in an economically incompetent manner were under Bob Menzies and under John Howard. They are the times when things went really bad. When the money just keeps pouring in, they throw the money out and don't build for the future. They don't build the infrastructure, build the education systems or build the health system. It's a demonstration of the incompetence of this government.

We want a future for our kids. We want a healthy future for our kids. We want an environment that our kids can look forward to in the future. We want to say that they will have the same benefits we had—that is, of a decent environment—but those opposite are too busy carving each other up on environmental issues. They now simply say it's all about reducing electricity prices. Well, it's not simply about reducing electricity prices; it is about maintaining a future for our kids and grandkids. This incompetent government should go, and this bill demonstrates that they don't have the capacity to deal with the issues effectively.

11:12 am

Photo of Slade BrockmanSlade Brockman (WA, Liberal Party) Share this | | Hansard source

I will just start by responding to some of the things Senator Cameron put before the chamber. I think the Australian people very well remember the Rudd-Gillard-Rudd years and the true rabble they were and the economic mess that we inherited from that government. The 2014 budget and the governments the coalition have led have done an absolutely magnificent job of putting the budget back on track and getting the economic circumstances in Australia back on a positive note. The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 does represent an ongoing effort from this government in the space of the black economy and in the space of those who aren't paying their fair share of tax that all Australians require of both the business community and individuals. Everyone has to make a contribution under the law, and this bill reflects that fact. It reflects an ongoing commitment from the Prime Minister in this area as well.

I will bring us back to the 2018 budget. Senator Cameron said we had done nothing in this space. But then-Treasurer Morrison announced a number of changes in this area: new phoenixing offences, to target operators who conduct or facilitate phoenixing activities; changes preventing directors from being able to improperly backdate resignations to escape liability; changes limiting the ability of directors to resign, if resignations would leave the company with no directors; changes restricting the ability of related creditors to vote on appointing, removing or replacing external administrators; and changes extending the director penalty regime. This bill represents a step in an ongoing process of making sure that everybody—businesses and individuals—pays their fair share of taxation. This is never something that reaches a finishing point. We always see technological change, particularly—and other things, but technological change, particularly—as being one of the ways in which some people in society seek to avoid paying their fair share of tax. That is what this bill addresses.

The government is committed to a fair taxation environment for businesses to ensure that all businesses are compliant with the law. This is absolutely critical to fairness in society. Government has announced these measures to address a growing issue in the black economy, and this is particularly in relation to deliberate tax fraud carried out through interference with point-of-sale technology. The measures in this bill form one part of a broader suite of reforms that the government is progressing through its response to the Black Economy Taskforce final report.

So what does this bill do? It bans the manufacture, distribution, sale and use of sales suppression technology in Australia. This is technology with no purpose other than to facilitate tax fraud by allowing businesses to conceal their income by manually altering sales figures. It extends the taxable payments reporting system to two industries that present tax compliance risks, and they are the cleaning and courier businesses. This is to ensure that payments made by businesses to contractors in these industries are reported to the Australian tax office.

Schedule 1 deals specifically with the electronic sales suppression tools. The schedule creates a number of new offences pertaining to the manufacture, distribution, possession, sale and use of electronic sale suppression tools for the purposes of not disclosing business income. This technology is used solely for the purpose of tax evasion; it has no other reason for being on somebody's computer. The new offence will restore integrity to the tax system. There is evidence that the prevalence of this technology is on the rise globally, with a number of international jurisdictions taking similar actions to crack down on this activity.

This is where the government's involvement in international forums that deal with these sorts of issues is so important, because we see these practices spread out globally. Often, the software is not developed in the domestic context; it's developed overseas, and these matters often appear in other jurisdictions first. By being involved in those forums we are able to get advanced warning that this may be coming our way and be able to take action in a timely fashion. But, as I said, this is an arms race. Our legal system as it stands is never going to be able to take into account what may come next year, or in five years or 10 years, so this place and the government need to be responsive to these changes. And that's what this government has been.

The sales suppression software comes in the form of a physical device or program, or some other thing capable of manipulating or destroying records that an entity is required to keep or make. As I said earlier, there is no legitimate use for these tools. Their only purpose is to erase the transaction records from point-of-sale or accounting systems, leaving no audit trail. Common techniques include the reclassification of GST taxable sales to GST non-taxable sales, or reducing the amount that the sale was for. This is done in such a way that there is no evidence trail of the changes made, making prosecution or recovery very difficult for the ATO.

It is important to note that, while these practices are already illegal, this bill seeks to criminalise the software and devices which allow businesses to evade detection for these offences easily. Obviously, some of these things are very hard to track down—particularly when these pieces of software and devices are specifically designed to erase all records. That's why it's very important that we actually ban the tools themselves and not merely the practice. The offences being introduced by the government are subject to strict liability and heavy penalties to deter the use of this technology and to clamp down on these practices.

Schedule 2 involves third-party reporting. The second schedule implements the third-party reporting requirements for businesses in the courier and cleaning industry. This is in response to evidence that there is significant underreporting of income in these sectors as identified by the Black Economy Taskforce and the Australian tax office.

We're ensuring that we do have a fair taxation system. The government is committed to making sure everyone pays their fair share of tax. But this is also about making sure that taxes are as low as possible. If everyone pays their fair share, then taxes do not need to be in any way artificially high. We need to maximise the revenue under the current system, not seek to impose new taxes on people. Individuals and businesses engaging in illegal tax avoidance undermine the integrity of the entire system and unfairly shift the burden onto law-abiding Australians, which we must always remember is the vast, vast majority of Australians. The vast majority of Australian businesses and the vast majority of Australians are not involved in these kinds of practices, and we cannot tar all industries and all businesses with the same accusation or brush. We don't want to think that every business is involved in this activity. It's simply not true. We know that the vast majority of businesses do pay their fair share of tax. However, those who don't unfairly shift the burden onto those who do.

Just as we have delivered on our plan to crack down on multinational tax avoidance by introducing new laws to close loopholes and ensure that profits are taxed in Australia, as they should be, we're also ensuring that Australian businesses are paying their tax according to the law in this particular area. These measures form part of the government's commitment to cracking down on tax avoidance so that we can continue to deliver to all Australians the services that are essential and so that we can afford to deliver our agenda on tax relief for hardworking Australians. So, we can continue to do all the things that a government does that are worthwhile for people. However, we also need to recognise that business plays a fundamental role in employing and that contracting is not something that is illegal or that should be in any way restricted in our society. It's a very important tool for business. It's a very important way for people to gain jobs, Senator Cameron.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | | Hansard source

Seven bucks an hour. Seven bucks an hour.

Photo of Slade BrockmanSlade Brockman (WA, Liberal Party) Share this | | Hansard source

It's a very important way for people to get a job. All businesses should comply with the law, but it is a very important way in which people find employment, and employment is a source of worth. It is a source of dignity. It is the best thing that we can do for people, and it is certainly far, far better than any form of welfare. So I commend this bill, and I certainly hope that we see it through this parliament.

11:22 am

Photo of David LeyonhjelmDavid Leyonhjelm (NSW, Liberal Democratic Party) Share this | | Hansard source

I rise to speak on the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. Creativity is fundamentally human. When art is found on the caves of Arnhem Land, we know beyond any doubt that it was a human being who drew it. Yet this bill seeks to place creativity under the cloche of the criminal law. Schedule 1 of this bill makes it illegal to create software that can be used to falsify point-of-sale records of businesses. A software creator faces a reverse onus of proof in the event of prosecution. This is contrary to the fundamental principle of our system of justice, dating back 700 years to the Magna Carta, that the accuser makes the case. It also contravenes another principle—that it is the intent of the criminal that matters, not the tools used. A criminal act requires a guilty mind. Tax evasion is a crime in Australia. Criminalising the creativity of software developers whose tools might be used to evade tax is not the answer; better enforcement of tax evasion law is. Sales and tax return information can be recorded by hand, fairly obviously, with no software, all quite legally. Yet if a shopkeeper uses such means to falsify sales records in order to commit tax evasion, should we seek to ban paper or ink? Clearly this is ridiculous.

Schedule 2 to this bill continues the confusion about whom the law should target—the criminal or the consumer. It seeks to impose a regulatory burden on companies that employ courier or cleaning services. The justification for this is that these services are said to be particularly prone to tax evasion. Again, this is wrong. It should be the courier and cleaning operators that are targeted by tax evasion enforcement authorities, not the innocent people or businesses that pay for their services. This is no more than punishing the innocent for the crimes of the perpetrator. I oppose this bill.

11:25 am

Photo of Amanda StokerAmanda Stoker (Queensland, Liberal Party) Share this | | Hansard source

I rise to speak in support of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. A black economy is one that seeks to avoid the obligation to contribute to the welfare of our society, and it penalises Australians in all walks of life. Its defining feature is an intent by individuals and businesses to avoid making a fair contribution to the operation of this country. It's a problem, and at times it can be looked upon by those who participate in the black economy as their being clever in their efforts to avoid the taxman. The consequence of that deprivation, though, is that we have less available for us as a society to invest in health, education and the range of other essential services that are provided by government. It means that the people who are honest in their financial dealings are penalised by having to carry a greater impost or a greater share of what's necessary to run this country.

What are the features of a black economy? It can be as innocuous as paying the tradie cash to get a lower quote for some work around the house or accepting cash wages off the books. It can be welfare fraud, moonlighting, undeclared income or phoenixing. More worrying is its link to crime and criminal activity. The laundering of money is a major feature of the black economy—or, as it's sometimes called, the cash economy or the underground economy. It's easy to think of this as a victimless crime, but it's not. The victims are those people who do the right thing, the individuals and families who contribute fairly to the tax system, the small businesses who do the right thing but suffer because their competitor isn't operating on the same level playing field.

Another invidious feature is the potential that gaming the system will become endemic, putting increasing pressure on those people and businesses that are doing the right thing. We hear Labor banging on all the time in this place about inequality. Well, here's a classic example of inequality whereby many people are doing the right thing while another group are not. Any growth in the black economy becomes even more disconcerting, given the recent economic observation that 40 per cent of taxpayers are net contributors to the budget while 60 per cent are net consumers from the budget. With the ratio of people who are working to those who are not working in decline as the population ages, the dollars that aren't collected will exacerbate the problem of funding the core operations of a government.

As an aside, while talking about people and organisations carrying their fair share of tax contribution, it's difficult not to query why trade unions and the quite enormous enterprises that many of them run also escape the tax system. When organisations like the CFMMEU have assets in excess of $350 million, quite substantial commercial business operations and an annual income of over $130 million that comes through it but pay no tax, it's a distortion. I'd have to say that that's a classic example of inequality. While the black economy can be traced back to the time that taxes were first collected, its sophistication has increased with the advent of technology and changes in business models. The sharing economy and the ability, through computer coding, to be clever bring new challenges to the tax system.

How big is the black economy and what are its dynamics? Unfortunately, it seems that the black economy is growing at a rapid rate. The Black Economy Taskforce has estimated that the black economy is worth three per cent of GDP, or approximately $50 billion per year. This is 50 per cent larger than the figures estimated by the Australian Bureau of Statistics in 2012. That's an acceleration that is not sustainable. What's just as concerning is that cash wages and unstated business income make up only half of the black economy. For instance, $16 billion is lost to money laundering, $7 billion to $10 billion is lost to illegal drug activity, $3 billion is lost to phoenixing and $2 billion is lost to identity fraud.

This $50 billion burden on the Australian economy hinders the government's ability to fund essential services for those who really need them, to provide the basics of a secure Australia, to provide, quite importantly, tax relief and to pay off the debt and deficit left to us by the Labor Party. And $50 billion could pay for a lot of things. It could pay down an awful lot of debt. It could pay for the construction of 100 new high schools, 22 new hospitals, 12 new submarines or even 15 coal-fired power stations. I am pleased that the government has recognised the problems of the black economy and responded to the Black Economy Taskforce's final report as part of the 2017-18 budget.

Proactively, the government has announced these measures to address the growing economic and social problems that arise from the black economy: banning the manufacture, distribution, possession, sale and use of sales suppression technology, which allows businesses to conceal their income, and extending the taxable payments reporting system to two industries that currently present tax compliance risks, the cleaning and the courier industry, to ensure that payments made by businesses to contractors in these industries are reported as they should be to the Australian Taxation Office.

The bill delivers on the 2017-18 budget decisions. The measures in this bill form one part of a much broader suite of reforms that the government is implementing through its response to the Black Economy Taskforce's final report. In schedule 1 of the bill, the government addresses electronic sales suppression tools. One of these is a device, program or other tool capable of manipulating or destroying records that an entity is legally bound to keep or make. The primary function of sales suppression software is to facilitate the understatement of a business's income to facilitate tax evasion. I can't see a legitimate use for this kind of technology. It's there for the purposes of avoiding an audit trail. Currently, penalties are only imposed on the taxpayer for evading tax or not keeping proper records in the first instance, but they don't, at present, explicitly penalise any part of the supply chain for the possession or use of this kind of software. The new offences target each stage of the software supply chain, including manufacture, production and sale.

The schedule creates new offences for the manufacture, distribution, possession, sale and use of electronic sales suppression tools for the purposes of not disclosing business income. There is no legitimate reason for having these tools. They remove transactions from electronic record keeping systems. They change transactions to reduce the amount of each sale made. They can modify GST taxable sales into being GST non-taxable sales for the purposes of those records. In all instances, no audit trail of the process of making those changes is kept. The government is introducing offences that are subject to strict liability and heavy penalties to deter the use of such technology right across the software supply chain. This technology is used solely for the purposes of tax evasion, and the purpose of these offences is to ensure that there is integrity in the tax system.

Recent reports from the Organisation for Economic Co-operation and Development, the OECD, have highlighted that this software is spreading globally. Its use has been identified in a number of jurisdictions, including Canada, the United States of America, Germany and Sweden. Many of those have also implemented measures to address this risk. The ATO has uncovered concrete examples of the use of this software in Australia. It was recently reported in the US that sales suppression software was allegedly used to collect $20 million in fraudulent sales from the restaurant industry that was sent to Hezbollah, the terrorist group in Lebanon. In Sweden, an undercover documentary team identified 100 companies that were using the software. In Norway, the Norwegian Hospitality Association estimates that between 10 and 20 per cent of sales in the restaurant industry are fraudulent because of the use of tools like this. And sales suppression in Canadian restaurants is estimated to cost Can$2.4 billion per year.

Schedule 2 of the bill deals with third party reporting. From 1 July 2018, it would require businesses in the courier and cleaning industries to give an annual report to the ATO regarding the payments they make to businesses for the provision of courier or cleaning services. Those reporting obligations would apply from the 2018-19 income year, and reports would be required by 28 August 2019. The measure is estimated to result in the inclusion in the ordinary tax system of $132 million in taxes over the forward estimates period. Business-to-business payments for courier and cleaning services are within this scope. The implementation of taxable payments reporting systems in the building and construction industry resulted in improved contractor tax compliance and the reporting of income. This is an extension of that policy—that approach—to other industries that are regarded as high risk for black-economy-type activity.

The ATO has prepared guidance material designed to assist businesses that operate in the courier and cleaning industries to transition to compliance with these reporting requirements, to try and ease the process of compliance with these measures. The information that's reported to the ATO is used for the pre-filling of tax returns or activity statements which should, in fact, ultimately make it easier for contractors to be able to lodge their income tax returns and allow for data matching to ensure that contractors are complying with their tax obligations, such as correctly lodging their income tax returns and complying with business activity statement obligations.

These are all welcome measures to address the black economy and they need to be considered in light of the wider reforms the government has undertaken in changing tax arrangements. This government is getting on with the job of building a strong and fair economy and creating jobs—all within the fairness of a tax system that works for all businesses and for all Australians. I support this bill.

11:37 am

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | | Hansard source

I rise today to say that the Greens support the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018, but I note that I will move a second reading amendment when I finish this speech.

We, as a party, have taken tax avoidance in this country very seriously. My previous colleague and leader, Tasmanian Christine Milne, initiated the original Senate inquiry into multinational tax avoidance. That kicked off nearly four years ago. A number of senators in this chamber have been involved in that long-running inquiry. It's still continuing in various forms, but we've managed to get some good outcomes in this place—one is all of us working together on multinational tax avoidance. We still have a long way to go; there are still many more things we have to do. We have to continue to prosecute the case in Senate estimates every time we speak to the ATO, and we need to continue to push for stronger measures to crack down on tax avoidance across the board.

This bill also targets tax avoidance. It outlaws the use of electronic tools that are used by a business to falsify their sales so as to reduce their recorded income and to misrepresent their employee records. The measures in this bill should ensure that more businesses are paying their fair share of tax and paying their workers their fair due. That's ultimately what this is about: it's about making sure that businesses pay their fair share of tax. We, as individuals in this country, all know that if we don't do the right thing in our own tax returns we run the very serious risk of severe penalties. It shouldn't be any different for the corporate sector. We have to make sure that the Australian tax office and our other regulators have the right resources to audit and monitor tax avoidance, and we need to work through international treaties to target some of the biggest tax avoiders in this country.

While we are strictly talking about tax avoidance, or illegal and unethical behaviour, we should also be tackling some of the bigger issues around corporations not paying their fair share of tax, by looking at things like the petroleum resource rent tax. I have said it a million times in this place and I'm going to continue to harp on about this: we can't talk about fairness and equity and tackling inequality in this country unless we talk about tackling the petroleum resource rent tax. Nearly $300 billion in legal tax credits have been granted through a system, a rort, which has been in place in this country for nearly two decades. It allows some of the biggest and most profitable countries on the planet, which happen to be also the biggest polluters on this planet, to avoid paying tax and avoid paying royalties to the Australian people for the resources that they extract from our sovereign nation. In my opinion, that is very low hanging fruit—for the Senate to bring in changes to the PRRT. There are others around this chamber who want to see this happen. We had the specific sub-inquiry into this issue through the multinational tax avoidance inquiry, and it is something which we absolutely need to get on with. Nevertheless, all these challenges face us. Bills like this matter, in the aggregate.

We support this bill, as we do any measures that are genuinely designed to crack down on the black economy. But, if we are going to talk about the black economy and raise these issues in the federal Senate chamber, then we need to talk about money laundering in the bigger context, especially money laundering through real estate. I will use the opportunity provided in this bill today to move a second reading amendment that highlights 12 years of inaction on this issue—12 years of inaction on what is arguably the biggest issue in the black economy. I don't think there is anyone in this chamber who could deny the reason we haven't cracked down on the dark heart of money laundering in this country, and that is that vested interests have lobbied so hard to stop this from happening. I'll be outlining the details in my second reading amendment.

There are a couple of points to note—they are in my second reading amendment, which I hope all senators have had a chance to look at. The explanatory memorandum to the 2006 anti-money laundering and counterterrorism financing bill forecast a second tranche of legislation that would regulate real estate agents and a range of non-financial transactions provided by accountants and lawyers. That was in 2006. Twelve years ago that legislation said: 'This has to happen. This needs to go the next step.' Once again, I ask senators to reflect on why we haven't got there in 12 years. While I'm not downplaying the importance of what we're doing here today, the biggest issue in money laundering in this country is still an issue, and there has been no solution and no legislative change that has come before this chamber to propose cracking down on that. There has been a discussion paper, which has been looked at by several governments over the years. I understand Senator Brandis himself wanted to tackle this issue before he finished up as Attorney-General, but it never happened. So, even back then, they were saying, 'We need to go this next step.'

In April 2016, the government released a statutory review of the AML/CTF laws—the anti-money-laundering laws. This review recommended that the government develop options for regulating lawyers, accountants and real estate agents under the act. Exactly 10 years later, the government review recommended that we take action on this issue. The government then undertook consultations on the regulation of lawyers, accountants and real estate agents under the act, and this finished in January 2017 with a promise to act soon thereafter—so 18 months or so ago. But, once again, we have seen nothing since. Action on this issue has been stalled.

In the few seconds that I have left before we move to other items—and I presume I will be in continuation after that, Mr President—I just once again ask the Senate to reflect on why we're having a bill like this before us today and yet the issue that's most critical hasn't come to the Senate in legislation.

I move:

The Australian Greens amendment on sheet 8499 as revised:

Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018

At the end of the motion, add:

", but the Senate:

(1) notes:

(a) the explanatory memorandum to the Anti-Money Laundering and

Counter-Terrorism Financing Bill 2006 forecast a second tranche of legislation that would regulate real estate agents, jewellers, and a range of non-financial transactions provided by accountants and lawyers;

(b) in April 2016 the government released the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 that contained a recommendation for the government to develop options for regulating lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Act;

(c) the government commenced consultation on the regulation of lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Act, and submissions to this consultation closed in January 2017;

(d) the Financial Action Task Force's April 2015 Mutual Evaluation Report on Australia's measures to combat money laundering and terrorist financing stated that Australia is an attractive destination for foreign proceeds of crime, particularly corruption-related proceeds flowing into real estate;

(e) the December 2017 OECD Phase 4 Report on Australia's implementation of the OECD Anti-Bribery Convention recommended that Australia address the risk that the real estate sector could be used to launder the proceeds of foreign bribery; and

(2) calls upon the government to introduce legislation that would address money laundering through real estate."

Photo of Scott RyanScott Ryan (President) Share this | | Hansard source

Senator Whish-Wilson, you will be in continuation when debate resumes. Being 11:45, the debate is interrupted.