Rebekha Sharkie (Mayo, Nick Xenophon Team) Share this | Hansard source

There is no doubt that the Nick Xenophon Team have shown that we have been a long-time supporter of small businesses. Small businesses, including over 100,000 farmers, are the backbone of the Australian economy, accounting for over 90 per cent of all businesses and just under half of all employees. It is an inescapable reality that Australia now operates in an internationally competitive market for investment. In order to entice more investment, to help grow our small businesses and to increase employment, we need to make Australian small businesses as attractive a destination as possible for investment. The Nick Xenophon Team is therefore supportive of extending the tax cuts to small businesses of up to $10 million in annual turnover. We can see that many small businesses do have a turnover higher than $2 million, particularly when you look at businesses like independent petrol stations, small supermarkets, restaurants, family accountants and even local lawyers and tradies—your average small businesses. In my electorate of Mayo, 99.6 per cent of businesses have an aggregated turnover of less than $10 million. To put it another way, of the almost 11,000 businesses in Mayo, only 43 are major enterprises with turnover in excess of $10 million.

Tax cuts can make a big difference to small business cash flow, and this has a real impact on how well a small business operates. It can mean the difference between taking on an extra employee or not, or opening a second shop. It can mean the difference between keeping their doors open or shutting down. Big businesses, on the other hand, enjoy economies of scale. They do not face the same disadvantages in managing cash flow or attracting investment that small businesses face. Whilst a lot of big businesses do pay their fair share of tax, many unfortunately do not. The Australian people are increasingly aware of how big a problem multinational tax avoidance is for our country and how it is undermining Australia's prosperity and future. This is because every tax dollar that multinational businesses do not pay is another dollar that must be taken out of the pockets of honest Australian businesses, workers and families. Businesses that engage in multinational tax avoidance are leaning heavily on Australian taxpayers, forcing them to put more than their fair share in to fund the services and infrastructure that multinational businesses also get the benefit of.

As I mentioned in my speech on the Diverted Profits Tax Bill 2017 in the parliament earlier, there are many examples of multinationals not paying their fair share of tax. For example, Google had an estimated income of $2.5 billion from local advertising in 2015, and yet they declared revenue in Australia of only one-fifth of that amount and paid only $16 million in tax. Why would they be entitled to receive a tax cut? That tax represents just 0.64 per cent—one fraction of one percent—of their estimated revenue. I cannot see why we would be kicking goals for them. In 2015, Facebook Australia's gross revenue figures were reported to be a measly $33.5 million, yet investment bank Morgan Stanley estimated that Facebook Australia's actual earnings from advertising in this country were between $500 million and $600 million. Facebook in that year paid only $814,000 in tax. Tell me, do we really need to give them a tax cut? Do we really need to support legislation that would give a company with those sorts of figures further ability to reduce their tax?

According to documents released by the tax commissioner in 2015, Transfield, a company with a $2.8 billion turnover, paid zero tax in the 2014 financial year. That same financial year, Adani Abbot Point Terminal in Queensland, which had a turnover of $268 million, also paid no tax—zero tax! How can it be possible that such huge companies can operate in Australia and pay zero tax? Something is seriously wrong if we think that that is okay and at the same time we are trying to put through this parliament $50 billion worth of tax cuts. According to Oxfam:

… as a result of tax dodging by Australian-based multinational corporations, the Australian public missed out on an estimated AUD $5-6 billion in 2014—

alone. To put this in perspective, this is roughly equal to the size of the annual South Australian health budget, and it is not too far off twice the annual South Australian education budget. Just imagine what we could do with that money if it were spent on our communities, not just in South Australia but all over Australia. People are doing it tough all over this country while the big multinationals are laughing all the way to the bank and being supported by government to do so. The government continues to reduce funding for health and education instead of focusing on efforts to combat multinational tax avoidance. It continues to rip money out of public hospitals and rural roads instead of getting the Googles and Facebooks to pay their fair share of tax.

Beyond this fundamental issue of equity is the broader question of whether tax cuts to big business would actually return the benefits to Australian society that the government argues that it could. Work by The Australia Institute indicates that a third of all benefits from the company tax cuts would accrue to just the largest 15 publicly listed companies in Australia. These include the big four banks and Macquarie, BHP, Rio Tinto and Woodside Petroleum, the supermarket duopoly, Telstra, QBE Insurance, CSL and Westfield. You will note that most of these companies operate in markets with high concentrations of market power. The predominant strategy of these duopolies and oligopolies and is to maintain their market share, through which they derive their market power and their ability to keep prices high. Innovation is far less important than advertising and strategic competition in these markets, and where there is innovation, it is to reduce costs—for example, by automating jobs through ATMs and self-serve check-outs, or outsourcing their domestic call centres to countries across Asia.

I have read very carefully what The Australia Institute have reported on this. They say:

If the aim of the company tax cut is to increase investment and employment much of it will be wasted if it is given to—

these large businesses. For example, in 2015 the large banks and insurers in this country made nine per cent of taxable income yet only 1.2 per cent of the total private investment in Australia. The evidence is thin on the ground that larger profits from these large banks would translate into more domestic employment or higher salaries, except for upper management or those who are in a better position to capture the super profits. I had a look before I came down to the chamber: as reported in The Australianin November 2015, Westpac cut more than four per cent of their workforce—more than 1,300 people lost their jobs—despite in the same season stating that they earned a $4 billion profit, increasing their profits by seven per cent. Where is the evidence that if we give these big banks a tax cut then they will somehow magically put on more staff? There is no evidence.

Besides which, the real profit of the company tax cuts is meant to be to attract foreign investment to Australia, the argument being that the benefit in terms of jobs and innovation that the foreign investment will bring in will outweigh the cost of the tax revenue forgone. But if our domestic companies are already making more than enough profits to enable them to reinvest in their own businesses, all a tax cut does is create a leakage of tax revenue via their foreign shareholders. This is a substantial leakage. In 2015, total foreign ownership of Australian non-financial corporations was over 40 per cent. For financial corporations, a group that includes the big banks, total foreign ownership was about 55 per cent. This means that, on average, 55 per cent of the value of a tax cut to a bank will be sent overseas to the pocket of a foreign shareholder. It is no wonder that even some of the coalition backbenchers have spoken about making the big four banks exempt from company tax cuts, although I note that that was quickly shut down.

This is an absolutely rubbish return for the Australian taxpayer. There is no reason to think that foreign shareholders are necessarily investing their fatter dividends into brand-new projects and enterprises in Australia. A tax cut for big business is simply not a tax cut well spent for the Australian economy. Even if you were trying to encourage foreign investment, it does not seem fair to tax the Australian firm more than the foreigner, even if one is a lazy domestic big business and the other is an innovative foreign investor. However—and here I return full circle to my original argument—it makes more sense to give tax cuts to smaller firms than to larger firms, because small business tends to be more competitive, more innovative and—dare I say—more agile, because they have to be in order to survive.

In conclusion, the Nick Xenophon Team will support tax cuts to businesses with an aggregated turnover of up to $10 million. We understand that those are your neighbourhood petrol stations, we understand that those are your small supermarkets in your townships and we will continue to stand behind the small businesses run by hardworking Australians every day. But we cannot in good conscience support tax cuts for the biggest Australian companies, which do not necessarily reinvest a strong percentage of their profits in domestic activity that would generate additional employment. And we cannot in good conscience support a tax break for big business while multinational tax avoidance remains meaningfully unaddressed. We need to ensure that big national businesses pay the fair share of tax they are meant to be paying before we as Australians give them another tax cut.

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