Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 - Second Reading


Senator IAN MACDONALD (Queensland) (13:07): The Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill implements some measures announced in the 2015-16 budget by the then Treasurer Joe Hockey. Mr Hockey will be well and favourably remembered in this place and in Australia for many things, but perhaps one of his biggest achievements during his time in this parliament was the work he did on addressing multinational tax avoidance laws—not just in this country but throughout the world. I recognise Mr Hockey's leadership at the G20 when this matter became a real issue, and it was a result of the G20 actions in Brisbane, as I recall, that global work started to address what is an issue of great concern not only to Australia but to many, and perhaps most, countries around the world.

I am delighted to be speaking in support of the bill. I hear what the previous speaker says about adopting some measures from the Labor Party. With due respect, the Labor Party was in power for six years—six long years, many Australians would say—and they did not do one thing towards dealing with multinational tax avoidance in that whole time. As an aside, it is a bit like the submarines—they never did anything in relation to the replacement of the submarines. Never was any serious decision made during the six years of Labor government. I appreciate what I take to be the support of the Labor Party on this bill but I do hear with some scepticism the urgings of the previous speaker that we should adopt Labor Party principles. As I say, actions always speak louder than words and it would have been good to see some action by the Labor Party during the six years they were in government.

This bill ensures that multinational companies operating in Australia pay a fair share of tax in Australia. Some multinationals—I emphasise 'some'—are artificially structuring their operations to avoid Australian tax by booking revenue from Australian sales offshore. This means, obviously, that they have an unfair advantage over local businesses and families and small businesses, who have to shoulder more of the tax burden because it undermines confidence in the tax system. There has been a lot of chatter in the last few weeks about tax reform. I want to emphasise that, unlike our opponents, when we talk about tax reform we are not talking about tax reform as an end in itself—the coalition, in having a wide discussion about tax and financial reform across the board, is about helping growth in our country, because growth means more jobs and a better standard of living for all Australians. We are about growth in the economy, growth in business activity, which means growth in employment activity and a better life for all Australians.

The multinational tax avoidance bill will allow the Commissioner of Taxation to treat these large multinationals as though they have a taxable presence in Australia and are subject to Australian tax. I should pay tribute to my colleague Senator Heffernan. Senator Heffernan has been on about this issue for more than a decade. In his own inimitable style, Senator Heffernan has raised this in many forums, with his words often falling on deaf ears. But he has persisted. I do not always agree with everything Senator Heffernan says on this issue, but I do want to acknowledge that part of the reason this parliament is currently addressing this problem is the advocacy work over many years of Senator Heffernan, and all credit to him. I understand he will be speaking later in the debate. I am sure he will say some things I do not agree with, but I do recognise and applaud the work Senator Heffernan has done over many years.

Senator Heffernan used to raise this with me years ago and I used to say to him that I thought we were clever enough to tax multinationals that exported profits overseas. I do not recall the detail, but I thought this was a big issue back in the fifties and sixties. I was only a very young person in those days, but there was this issue, as I recall, about General Motors-Holden's. They were making little profit in Australia but they were exporting profits back to Chicago. I understood that the Australian parliament in those years passed some laws that said we did not really care what they sold the vehicle for—we knew what they should be sold for so we assumed that that was what they had in income, whether or not they had it, and we taxed them accordingly. I remember saying to Senator Heffernan that I knew that had happened in the motor industry back in the fifties and sixties and I could not understand why we were not doing it now. Senator Heffernan had told me that he had spoken to the tax commissioner and there were reasons—which perhaps I never understood and if I did understand them I have forgotten—why that could not be applied more widely. I am pleased to see that this bill will ensure what all Australians want. I assure any listeners that the government is determined to maintain the integrity and fairness of our tax system and to ensure that companies who do operate in Australia, who do have economic activities in Australia, pay Australian tax.

There are some members of the Labor Party and the Greens here, and they might recall that early in the term of the Abbott government there was a surcharge being placed on all individual incomes to try to pay off Labor's debt, which if unaddressed would have approached $700 billion. You will remember that when the Labor Party took office they had $60 billion in credit in the piggy bank for a rainy day. Within a few years, they had blown the $60 billion and run up a debt of $100 billion. It got up to $200 billion and, if it had been unaddressed, it would have reached $700 billion.

One of the ways that the then Abbott government thought we might do something about it was to have a surcharge on incomes of individual people. I spoke against it. If I could have found another to call 'no', I would have voted against that, not because I objected to the surcharge on individual incomes. What I objected to—and as I said in a speech at the time—was that companies, many of which were multinational and many of which had few Australian shareholders, if any, were being let off scot-free. I could not understand that. I said to the Labor Party and I said to the Greens, 'Why aren't you with me? Why won't at least one of you call "no" with me so at least we can have a vote on this?' I repeat, it was not that I wanted to, in any way, avoid the surcharge on high income areas—I was totally in favour of that. But I did want to include multinational companies. I think I gave the suggestion that anyone making more than $5 million profit should pay a surcharge as well. It seemed perfectly reasonable to me. But did I get any support from the Labor Party? Did I get any support from the Greens, who are always on about multinational companies and how they are ripping off the world and how bad these people are? Did I get even a word of support from the Greens in that debate? Of course not. So it always makes me critical, particularly of the Greens. But the Labor Party are in the same category. They are hypercritical of all these stories about rip-offs by multinational companies. Yet when they had an opportunity to do something about it, where were they? They were missing in action yet again. That is the Greens political party all over—hypocrisy, hypocrisy, hypocrisy. If I had 10 hours to talk, I could give you—

Senator Whish-Wilson: Tell us about Bob Brown's boat.

Senator IAN MACDONALD: Tell you about Bob Brown's boat that was in the Cairns harbour and dropped oil into Cairns harbour in the Great Barrier Reef? Is that what you want me to tell you about?

Senator Whish-Wilson: Yes, that is it. That is what you want to tell us about.

Senator IAN MACDONALD: Well, if that is what you want to hear, Bob Brown was involved with Greenpeace. They took their Greenpeace ship into the Trinity Inlet in Cairns and dropped some oil into the inlet. Trinity Inlet, for those who do not understand, is just off the Great Barrier Reef. So the Greenpeace ship is the only ship that I have known in recent times that has actually polluted the Great Barrier Reef. Did we hear anything from the Greens about that at the time? Not a word.

Senator Whish-Wilson: But we heard it from you. We hear it from you every day.

Senator IAN MACDONALD: They were treated leniently by the Cairns magistrate. I think they were find only $15,000. The excuse was they had a new engineer who could not read the English words on the thing and he forgot to shut off some valve or something. I think they were fined $15,000, I might say to the Greens so they can pass it on to their mates in Greenpeace. I was waiting and waiting to see whether they paid that. Wasn't I waiting for the day when the time came that they were going to be arrested! But they did do what they were supposed to do, and they actually paid the fine that was imposed. Perhaps, Mr Graeme Wood would have contributed to it, Senator Whish-Wilson—you know, the guy who supported the Greens political party with the biggest ever private donation to any political party in the history of Australian politics. He is a certain gentleman who I have known. I do not particularly blame him. But he gave it to the Greens who, with their normal hypocrisy, slag anyone else who receives donations from private sources. But when they are the recipient of the biggest ever individual political donation of any party at any time in Australian history, then that is okay. That is just the hypocrisy. But I have distracted myself because of the interjections.

The government is leading this fight against multinational tax avoidance. I mentioned that Mr Hockey was president of the G20 in 2014. I am very proud about this. We led the global response to tax avoidance. Last year, the government did strengthen our defences against tax avoiders by tightening our thin capitalisation rules and limiting the scope for multinationals to claim excessive debt reductions. We did already have some regulations in place, but they were being avoided. This measure that we are dealing with today is only one part of a package. This bill will also implement country-by-country reporting, which was a recommendation by the OECD and the G20, and it will increase the penalties for those engaged in tax avoidance and profit shifting. As we announced in the 2015-16 budget, the government is actioning four key G20 OECD recommendations that came out of that 2014 conference. In addition to implementing country-by-country reporting, the government is consulting on rules targeting hybrid mismatches and is taking action on harmful tax practices and treaty abuse rules. Although Australia does not engage in harmful tax practices, the ATO has commenced exchanging information on secret tax deals provided to multinationals by other countries that may contribute to tax avoidance in Australia.

In relation to treaty abuse, the government is taking action to incorporate the OECD's recommendations into our treaty practice. We are also taking further steps to increase public disclosure through the development of a voluntary transparency code by May 2016. That code will enhance public confidence in the tax system and the community's understanding of the tax affairs of large companies. The government is also ensuring that the tax office has unprecedented resources to deal with international tax avoidance. That is very important because adherence to these rules is something that is not cheaply gained. It does require resources and the government has provided an additional $87.6 million to the ATO to investigate international tax avoidance. To date, the program has raised over $400 million in tax liabilities—not bad for an investment of an additional $87 million. The additional investigative and compliance work of the ATO has raised over $400 million, so that is pretty good, and it is estimated that this action by the ATO will raise $1.1 billion in total.

This is a bill that I hope has multi-party support. It is something that, as I say, some of us in this chamber, particularly Senator Heffernan, have been talking about for more than a decade. This is a first step towards addressing those issues and I encourage all senators to support it.

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