Wednesday, 17 June 2020
Treasury Laws Amendment (2020 Measures No. 2) Bill 2020; In Committee
by leave—I move Centre Alliance amendments (1) and (2) on sheet 8974 together:
(1) Clause 2, page 2 (at the end of the table), add:
(2) Page 29 (after line 10), at the end of the Bill, add:
Schedule 7 — Financial report ing obligations for large proprietary companies
Part 1 — Repeal of instrument
ASIC Corporations (Exempt Proprietary Companies) Instrument 2015/840
1 The whole of the instrument
Repeal the instrument.
Part 2 — Grandfathered exemption
Corporations Act 2001
2 Subsection 1408(6) (table item 7)
Repeal the table item.
Part 3 — Application
(1) This item applies to a company if, immediately before the commencement of this item, the company was exempted from complying with subsection 319(1) of the Corporations Act 2001 by the ASIC Corporations (Exempt Proprietary Companies ) Instrument 2015/840.
(2) Despite the amendments made by Parts 1 and 2, that exemption continues to apply to the company in relation to the 2019-20 financial year.
4 Instruments that provide relief from requirements of Corporations Act—Lodgment of annual reports by large proprietary companies
(1) Despite anything contained in the Corporations Act 2001, ASIC may not make a legislative instrument, however described, if that legislative instrument would have the effect of relieving the class of companies referred to in subitem (2) of the requirement to comply with subsection 319(1) of the Act for a financial year.
(2) The class of companies is the class of large proprietary companies that was relieved from the requirement to comply with subsection 319(1) of the Corporations Act 2001 due to the operation of the ASIC Corporations (Exempt Proprietary Companies) Instrument 2015/840 as in force immediately before the commencement of this Schedule.
For the benefit of the chamber: I am moving the same amendment that I moved for the Treasury Laws Amendment (2019 Measures No. 3) Bill 2019. This amendment seeks to remove from the statutes an exemption for 1,119 large proprietary companies from having to lodge an annual return with ASIC. That exemption creates a situation where there is scope for aggressive tax minimisation. That is what was presented to the Senate committee inquiring into corporate tax avoidance in the 44th and 45th parliaments. It also creates a situation where you have one class of companies and another class of companies. Any new company that comes along that meets the criteria for annual reports doesn't get an exemption. We can't have a situation where we have elite, wealthy business owners simply not having to lodge annual reports.
It's also important for anyone who wants to deal with a company to be able to go to ASIC and get access to reporting information to work out whether the company is solvent, what arrangements they have in respect of organisations and so forth. There is no justification for retaining this exemption. It was an exemption that was introduced back in 1995 as a temporary measure. Twenty-five years later it is still in the statutes. We know from the previous discussion on this last week that the government has no policy reason, other than it is still considering the 2015 report, for in fact not supporting this amendment. I will keep it brief: I will ask the minister whether or not he can present a policy reason for retaining this exemption.
This is the second instance of Senator Patrick attaching this amendment to a government bill. It is delaying important measures. The Morrison government is committed to corporate transparency. The issue raised by the senator's proposed amendment is the subject of a recommendation in the Senate economics committee's report Corporate tax avoidance, part I: you cannot tax what you cannot see. The government will respond to this recommendation in due course as part of its response to the Senate economic committee's Corporate tax avoidance reports. It wouldn't be appropriate to rush this amendment through prior to the government's response to the report being considered.
Very quickly, Minister: there's a resolution of the Senate that all committee reports be responded to within three months. This has gone beyond three years. It's five years since we've received a response on this. Is there any reason you can give the Senate as to why the government hasn't complied with the resolution of the Senate, and, indeed, why it has taken so long to respond to this very important Senate committee report?
Senator Patrick, there's nothing that I can add over and above what has already been put on record by ministers in this place when this amendment has been moved by you in the past. In relation to the report, we are working through it. In terms of delivering that response, it will be delivered. We are committed to corporate transparency but we don't believe that rushing this amendment through prior to the response to that report would be the appropriate way to do it, particularly on a bill that deals with very separate issues.
Labor will be supporting this amendment. There's a part of me that feels for Senator Seselja, having to give an answer like that—not wanting to rush something through that was recommended five years ago and then confirmed three years ago. I imagine the government's focus on this issue might become more urgent as this amendment gets repeatedly put on these bills, as Senator Patrick has indicated he's intending to do. We do believe that this amendment is worthwhile. We think it's sensible. It increases transparency and consistency in the corporate law system. The private companies on this list, many owned by Australia's richest and most powerful individuals, are benefiting from an unfair and out-of-date grandfathering regime. We do believe this amendment increases accountability for large proprietary companies. We have supported this amendment in previous bills and we support it today. I think, if anything, it's going to make the government take this issue more seriously than it perhaps has over the past five years.
The Greens also want to put on record that we'll be supporting this amendment today. We introduced this exact same amendment two years ago. At the time we worked with the Labor Party and the crossbench to try and remove grandfathering exemptions for some of the most wealthy individuals and biggest companies in this country from providing their financial reports to the Australian Securities and Investments Commission. Transparency should be in our genes. We can't fix a system until we actually see the problem. There is no excuse from a public policy point of view. I'm glad that Senator Patrick has put the same question to Senator Seselja that he put to Senator Hume: what is the public policy purpose of providing an exemption from providing accounts so that they can be publicly scrutinised? I haven't seen a good response to that question. I think the Australian public are watching this debate and will continue to watch this debate and look out for your policy response on this.
I wanted to take a point that Senator Seselja made, because it is a good point. This chamber, indeed this parliament, has worked on tax transparency. We have passed some really important legislation, working together, across party lines. Senator Hume was very keen to speak in detail about the multinational tax avoidance law on Monday. She was filibustering out the debate, but nevertheless it was a very good point that she made and I was glad she made it. We have done some really good stuff together in this chamber. The fact that this anomaly sits there and has not been tackled by this chamber stands out like Chopper Read at a Country Women's Association morning tea. The more good work we do, the more it looks like a stupid anomaly that we haven't actually removed this.
An honourable senator interjecting—
Yes, Chopper Read was an honorary Tasmanian, there at the end. That is not to say that I honour Chopper Read at all, however.
Honourable senators interjecting—
It's only because there was an interjection that might have suggested that. Nevertheless, I make this point: we have the ability today to pass this legislation and also to remove the grandfathering exemptions, exemptions that were brought in over 20 years ago by the Keating government and locked in by the Howard government. We have repeatedly raised this issue. It's been raised in numerous Senate inquiries. It's been raised by the Australian tax office at estimates and so on and so forth. There's no excuse for keeping Australians in the dark in terms of the financial matters of these big companies. Let's do it today. Let's get it out of the way and then let's get on with our business.
I think what we need to bring out in the open here is the donations. Over a thousand of these companies, since this grandfathering was put in place over 20 years ago, have donated more than $20 million to the Liberal Party. Pratt Holdings is one of those companies. Since that time, it has donated over $5 million to the Liberal Party. Minister, can you assure the Australian public that these donations have absolutely nothing—nothing whatsoever—to do with the reason you want to leave this grandfathering in place?
I have just one final comment in relation to this. As Senator Gallagher said, I will be putting this amendment on every Treasury bill that it is possible to put it on. I point out that this is not an inappropriate bill to put it on. It's an omnibus bill, and I'm simply adding in a measure to close a loophole. I was speaking with someone on your side of the chamber yesterday. I won't identify that person, but they said, 'We have to recognise that, on this one, we're pregnant.' Why don't you just have the baby?
I'll respond briefly. I don't know how to respond to the baby analogy, but I'll respond to the question from Senator Lambie, and, yes, I can assure her that there is no link.
The CHAIR: The question is that Centre Alliance amendments (1) and (2) on sheet 8974, by leave together, as moved by Senator Patrick, be agreed to.