Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

) ( ): I am pleased to rise this afternoon and speak on the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018. Whistleblowing plays a crucial role in uncovering corporate and tax misconduct. It is a key means of combating poor compliance cultures by ensuring that companies, officers and staff know that misconduct will be reported. The opaque and complex nature of corporate crime makes it difficult for law enforcement to detect abusive practices. In many cases, corporate crime is only detected because individuals come forward, in many cases at significant personal and financial risk.

The importance of protecting whistleblowers has been recognised for many years. However, while protections allegedly form part of the Corporations Act 2001, since 2004 they have been sparingly used and are increasingly perceived as inadequate, having regard to advances in the public sector and overseas. Currently, there are no specific protections for tax whistleblowers, and the range of secrecy and privacy provisions relied upon are incapable of guaranteeing absolute protection.

That is why, in the 2016-17 budget, the coalition government announced greater protections for those who disclose information about tax misconduct to the Australian Taxation Office. This will further strengthen the integrity of Australia's tax system. Active protection of whistleblowers to encourage them to make disclosures is essential, and the government is determined to ensure that it has the right legislative settings in place to achieve this, while at the same time ensuring disclosures can be fully investigated and that procedural fairness is provided to those who may be subject of a disclosure. That is why the government, led by the former Minister for Revenue and Financial Services Kelly O'Dwyer, committed to creating more transparency and accountability in business, by strengthening the current framework to ensure both corporate and tax whistleblowers can be confident of protection and greater incentives to make a disclosure. This legislation delivers on the government's 2016 budget commitments to protect individuals who blow the whistle on tax avoidance behaviour, tax evasion and other misconduct. It delivers on the government's commitment in Australia's first Open Government National Action Plan, released in 2016.

To have an open, transparent and fair tax regime is very important to making sure that we are attracting capital and that that capital is being invested where it can be put to the most productive uses. When we look at our overall tax scheme, we must be concerned about the 30 per cent rate of corporate tax that is payable in Australia and how that is internationally competitive with other jurisdictions. We are up against tax regimes in Hong Kong and Singapore, where tax rates are 15 and 17 per cent. In the UK, they are reducing their tax rate down to less than 20 per cent, and in the US we are seeing one of the biggest reductions in the US rate of corporate tax. We have to consider how much longer Australia can maintain that 30 per cent rate of corporate tax.

There have often been great concerns that, if we did reduce that rate of tax, it would somehow cut into government revenue. But our history tells us the exact opposite. If we look at our history from when Paul Keating reduced the corporate rate of tax to when Peter Costello and John Howard reduced the tax, surprisingly, and this applied every single time, the actual tax revenue that flowed into the Treasury was greater—not only in real dollar terms and nominal dollar terms but also as a percentage of GDP at the lower rate of tax. There is no guarantee that that will happen in the future, but we need to be very careful in monitoring the international situation to ensure that Australia's corporate rate of tax remains internationally competitive.

Apart from the corporate rate of tax in Australia, there is also the application of franking credits, a system that was introduced by Labor and backed by Labor governments past, because they understood that this was an important method to get capital creation into the Australian economy, to make sure that there was encouragement for savings and investment and that new businesses and new business opportunities could be taken up in Australia. That was the principle behind the franking credits. But what we see is a proposal—which is unfair, which is discriminatory and which is regressive—to change the application of franking credits in the Australian taxation system. What this ultimately does is separate a clear ideological fault line between those who sit on that side of the House and those who sit on this side. On this side, we fundamentally believe that, at first instance, the profits of a business belong to the shareholders. It is the shareholders who have put up the capital and taken the risk. The profits of the business belong to the shareholders and, if that profit is then distributed to those shareholders, it is taxed at their marginal rate of taxation. That is what we believe, and we believe that should apply the same for a sole trader, whether profits are earned in a partnership or whether the profits are earned by a business using a corporate structure. The 30 per cent tax rate is effectively a withholding tack. It is a tax for foreign investors. For Australian shareholders and Australian investors, it has been the policy of both sides of this chamber that that belongs to the individual.

The Labor Party don't believe the profits belong to the individual but to the business. We have a progressive marginal individual taxation rate in this nation. Those who earn between $0 and $18,200 pay no tax. We decided that is fair. Low-income earners who earn below $18,000 pay no individual rate of tax. From $18,200 to $37,000, for every extra dollar they earn, they pay 19c tax. Above $37,000 and up to $80,000, they pay 32½c tax in every additional dollar. From $80,000 to $180,000, it is 37c for every extra dollar earned, and above $180,000 it is 45c in the dollar. Of course, the Medicare levy is on top of that.

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