Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

The Treasurer in his ministerial statement outlined the principles as to why tackling tax avoidance is important, and he is right. He talked about the importance of foreign investment in Australia's economy. He is also right about that. I have made very clear Labor's approach to foreign investment, being in favour of foreign investment, and I have outlined publicly how I would have taken a different approach to the Treasurer on some key foreign investment issues that he has had to deal with in his time as Treasurer.

Tackling tax avoidance is, of course, the right thing to do. We need a government which can fund important investments in the future. The fact of the matter is that the Australian government will always need to tax to a certain level. The fact of the matter is that, if some people are avoiding tax, it simply means others are paying more. That is simply a matter of fairness. Businesses, whether they be big or small, domestic or international, should all be paying their fair amount of tax. This is a matter of competitive neutrality. Tackling international tax avoidance is about being fair to all businesses. It is a pro-business approach. So we agree with the principles outlined at the beginning of the Treasurer's statement. I do have to say, though, that I am disappointed that the statement did not contain much more substance than it did. I had thought, when I heard the Treasurer was going to bring down a ministerial statement today, that it would include some announcements, some steps forward. Unfortunately, it did not. There were 2,000 words, but very little action. In fact, the Treasurer and this government have not been proactive when it comes to improving our response to tax avoidance, unlike the previous government.

The Treasurer said in his remarks that we have a robust and sophisticated anti-tax-avoidance regime. Again, he is right, but that is due in large part to the actions of the previous Labor government. I want to take this opportunity in the House to pay tribute in particular to the former Assistant Treasurer of Australia, David Bradbury, who, under the member for Lilley's leadership, led the way in ensuring that we have what the Treasurer called a robust and sophisticated anti-tax-avoidance approach by reforming part IVA of the Tax Act—the anti-tax-avoidance section. So important and so good was Mr Bradbury's work that, after leaving the parliament, he has been employed by the OECD to lead the OECD's work on tax evasion. The Treasurer referred to strong technical support from the OECD. That technical support is being provided by the former member for Lindsay, David Bradbury, which shows just how well-regarded he is on an important international stage.

In the 2013-14 budget, Labor enacted a comprehensive package to reduce profit-shifting and multinational tax avoidance: addressing aggressive tax structures that seek to shift profits by artificially loading debt into Australia; better targeting of resource sector concessions for depreciating assets to support genuine exploration; improving the integrity of and ensuring better compliance with the foreign resident capital gains tax regime; closing loopholes in the offshore banking unit regime and the consolidation of the business entities regime; preventing sophisticated investors from engaging in dividend washing; and increasing ATO compliance checks on offshore marketing hubs and business structures. All these measures put together improve the budget bottom line by more than $5.3 billion. I need to say that, unfortunately, on coming to office this government decided not to proceed with important measures at a cost of $1 billion. I note that the Treasurer referred to this in his ministerial statement.

I also note a significant change in rhetoric from him on this point. He had previously claimed that these changes were not implementable—unworkable, poorly designed. Now he says that they would have imposed extra costs on business. He changed his excuse for not implementing these changes quite dramatically. I say to the Treasurer: if you are fair dinkum about dealing with tax evasion, you would be implementing the previous Labor government's changes. You would not be walking away from them. You would not be backsliding on them. You simply would be implementing them and you would, of course, have our support to do so. The chamber is sometimes asked, 'Where is the bipartisan approach?' If you had a bipartisan approach, we would congratulate you for implementing those changes if you had done so. You have not done so, and so we criticise the government for that.

On the matter of implementation, as a former Assistant Treasurer, a former Treasurer and a shadow Treasurer, I fully accept that tax changes can be complex to implement, that sometimes unintended consequences can emerge after announcement and that the tax office and the Treasury can provide advice as to that, but you work those through. You do not use them as an excuse to walk away from important tax changes; you do not use them as an alibi for letting tax evasion go free. You use it as an opportunity to work with business, to work with the tax office and to work with the Treasury to ensure workable, proportionate tax laws. You do not use them as an excuse—which this government has done and which they should be condemned for doing. This comes at a cost of $1 billion to the Australian taxpayers. As I said before, the Australia government will always need to raise a certain amount of tax revenue and, if some people are avoiding it, others simply pay more—Australian businesses and individuals pay more.

I want to go to the Treasurer's comments in relation to the tax office and compliance. This is important. The tax office implementing the tax laws and assurance compliance is a key part of any government's approach. The Treasurer referred to his asking the Australian Tax Commissioner to double his compliance effort. Let me make it very clear: we on this side of the House are strong supporters of the Tax Commissioner, Mr Jordan. He is a very good Tax Commissioner, appointed by my predecessor, the member for Lilley—a very good appointment from the business community. He is somebody who understands the tax system very well as a former deputy chair and chair of the board of taxation. But let me say this as well: simply asking the tax office and the Tax Commissioner to double his compliance effort at the same time as reducing funding from the Australian tax office makes absolutely no sense at all. We asked the tax commissioner to increase tax compliance efforts as well, but we gave him the resources to do it. We increased the funding for the tax office when we were in office. Under this Treasurer, the staffing complement for the Australian Taxation Office has been reduced by 4,700 people over the next four years. That is a very substantial reduction for the tax office. I say to the House very clearly: compliance will suffer as a result. With that many fewer people working for the tax office it is inevitable that compliance will suffer.

We would support the Treasurer in his request to the tax commissioner to double compliance efforts, but we say: give him the tools he needs to do the job. Give him the resources he needs. Rhetoric is not good enough. Words are not good enough. Saying that you have asked for more compliance at the same time as reducing the resources available to the commissioner is simply not good enough. It takes more than words to beat tax evasion. Words do not beat tax evasion. Rhetoric does not beat tax evasion. Chest-thumping does not beat tax evasion. Strong laws, properly enforced—strong compliance measures—beat tax evasion. A strong tax office beats tax evasion. My colleague and friend the shadow Assistant Treasurer has pointed out consistently the folly of the government's approach when it comes to tax office funding, and it does mean that people will be getting away with tax evasion.

I also want to go to the Treasurer's comment about transfer pricing and his commentary about technology companies in particular. He pointed out that in Australia we pay more for many goods, most particularly in relation to information technology—although he did point out other areas quite validly as well. This should come as no surprise to the House, because some people have been talking about this for some time. The leader on this particular matter has been the member for Chifley, who is at the table. He has been pursuing this matter aggressively and appropriately on behalf of Australian consumers, through his work on the House of Representatives Standing Committee on Infrastructure and Communications. Working with the member for Wakefield, the chair of that committee, he conducted a very good inquiry with the other members. The committee handed down its report a year ago. While it did go to tax evasion—it was not their remit—it did go to this issue, and I call on the government to take that report seriously and to examine its recommendations very seriously. A year has passed and nothing has happened. Australian consumers deserve better than that.

The Treasurer talked of the OECD and the G20 process—again appropriately. It is important that we work together with our like-minded nations, and good progress has been made. On tax information exchange there has been remarkable progress, I think, over the last six years. Countries which would not engage in tax information exchange now do—countries in our region; countries which could have been regarded as tax havens now exchange information with the Australian tax office. This has been a bipartisan effort. I was dealing with it when I was Assistant Treasurer, many years now, through the OECD. My successors in the former government did, and I am sure that will continue under this government.

The role of Australia as chair of the G20 is important. Of course, the G20 is actually run, in effect—some people may not appreciate this—by a troika of the chair, the previous year's chair and the incoming chair. Australia has played a role for some time in leadership in the G20, not just this year as chair and not just ending when our chairmanship ends but following on to the next year. So I would encourage the Treasurer not just to use our time as chair of G20—which is very important—but our time on the troika as being very important in providing leadership. This cannot be a 'set and forget' approach from the G20. Simply making statements and then walking away will not achieve the job. In our year as chair—which is a wonderful opportunity for the Treasurer to show that leadership—which will include next year, as it included me last year and the member for Lilley prior to that, it is very important that while we are on the troika, the effective co-chairmanship of the G20, that that work continues.

As the Treasurer said, the OECD action plan was endorsed at St Petersburg in 2013, when Mr Carr represented Australia. It was progressed at Moscow, when I represented Australia at the G20 finance ministers meeting; so this has been an ongoing process and I am glad to hear that the Treasurer will be continuing that work in Cairns, as he should, and he will have our bipartisan support as he does so. But we do need to see concrete action. Words are not enough. We need to see much more than that.

It is important that tax evaders know that this is not something which will be a temporary approach by any one government at any particular time. It is important that tax evaders know that they cannot gain governance and they cannot wait for one government to pass and another government to come in and then they will get away with their actions. They need to know that there is a bipartisan approach to tax evasion. To the degree that the Treasurer will pursue that, he will have our support. Again, this is why I express my profound disappointment that the government has decided not to proceed with those important measures that the previous government was implementing at a cost of $1 billion. Tax evasion is not beaten by lectures. It is not beaten by simply lecturing other countries that they should better, or lecturing the parliament. It is beaten by concrete actions, which the previous government showed—at some political cost and some political risk—that we were prepared to engage in. Unfortunately, the current government has not shown the same determination when it comes to that $1 billion in forgone tax revenue, because of their changes.

We talk of budget emergencies, the age of entitlement, the need for tough decisions; there is one right there—$1 billion which could be implemented. If the Treasurer had concerns about implementation, had concerns about details, then of course the Labor Party would be open-minded about changes he might wish to make to ensure that it could be properly implemented.

Mr Hockey interjecting—

If they are undrafted, get them drafted.

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