Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Hansard source

I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes:

(1) the former Coalition government implemented more than a dozen measures to combat multinational tax avoidance including by:

(a) playing a leading role in the original OECD BEPS project, and committing to the OECD two-pillar solution to multinational tax; and

(b) introducing the Multinational Tax Avoidance Law; the Diverted Profits Tax; strengthening the thin capitalisation and transfer pricing rules; doubling penalties for multinational tax avoidance; and establishing the Tax Avoidance Taskforce;

(2) that despite promising to only raise taxes on multinationals at the election, the Labor Government have broken promises to raise taxes on superannuation, on unrealised capital gains, on franking credits, and end small business tax incentives;

(3) that the original form of this Bill, and its last-minute changes, show once again that Labor have an anti-business approach to consultation, regulation and policy to support business;

(4) independent economist Chris Richardson expects that Labor will breach the 23.9% tax-to-GDP cap in their first year in office; and

(5) that higher taxes are not a solution to a cost-of-living crisis and collapsing productivity under Labor".

I rise to speak on the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. This is a two-schedule Treasury omnibus bill. Schedule 1 introduces new rules on the disclosure of information about subsidiaries for financial years commencing on or after 1 July 2023. Australian public companies, both listed and unlisted, must disclose information about subsidiaries in their annual financial reports.

Schedule 2 to the bill aims to strengthen the thin cap rules in division 820 of the Income Tax Assessment Act. The amendments seek to address risks to the domestic tax base arising from the excessive use of debt deductions. They introduce new thin cap earnings based tests for a certain class of entities. The safe harbour test will change from debt deductions up to 60 per cent of assets to debt deductions up to 30 per cent of profits defined as earnings before interest, tax, depreciation and amortisation—EBITDA. The amendments also establish an arms-length debt test in the form of a third-party debt test. The schedule introduces new subdivision 820-EAA, debt deduction creation rules. These rules disallow deductions to the extent that they are incurred in relation to debt creation schemes. Importantly, the new test excludes related party debt, supporting property and infrastructure investment.

The coalition won't be opposing the bill, whilst noting the shambolic approach to consultation that we've seen with this legislation. Schedules were pulled just hours before introduction, to the point where the explanatory materials refer to schedules of the bill that actually don't exist, Mr Deputy Speaker. We know Labor wanted this bill to be much more onerous, to tie businesses down in more red tape, which would not have improved the revenue raised by the bill but would have cost dearly in terms of the productivity of our economy.

We know the government wanted this bill to go further because their own explanatory materials, on page 9, refer to a third schedule. We know that at the last minute, amid extensive backlash, the government gutted this bill from what they'd proposed. They pulled out schedule 3 even though their reference to it remained in the explanatory materials. We welcome that change—it was the right change to make to the form that went to consultation—but we can't commend the government for the overreach in what was proposed to be in the bill. It's just another example of Labor's desire for overreach on tax, going further than was promised at the election and ignoring concerns of the community.

I see the member opposite, the member for Lyons, shaking his head, but the truth is that this is beyond what was promised at the election, ignoring the concerns of the community. And it was pulled, in a shambolic way, because of a big backlash against an unworkable proposal. They've been ignoring the concerns they've heard and denying and spinning to avoid the problem. We saw this with franking credits. We've seen it with superannuation taxes. We saw it with the gas industry. We almost saw it here, but, happily, that schedule and those proposals were pulled.

It's important to note that the coalition took extensive action over nine years in government to address multinational tax avoidance, and this is highlighted in the second reading amendment that I've moved. As 2014 G20 hosts, Australia played a leading role in the original OECD BEPS project, which was initiated in 2013 and delivered in 2015. We played a leadership role as an early and vigilant adopter of the OECD and G20 bas erosion and profit-shifting—that is, the BEPS—recommendations. These establish a multilateral approach to prevent tax avoidance and increase tax transparency for administrators.

The sorts of measures that we pursued included introducing a diverted profits tax, which limits a company's ability to shift profits out of Australia; introducing the multinational tax avoidance law, which ensures companies do not avoid a taxable presence in Australia; strengthening the thin capitalisation rules; strengthening transfer pricing rules; doubling the penalties for tax avoidance; and establishing the ATO Tax Avoidance Taskforce. The task force, which was created in mid-2016, enforces existing laws and supports the government's new tax avoidance measures. It targets multinational enterprises, large public and private groups and wealthy individuals. From 1 July 2016 to 30 November 2021, the ATO raised $24.2 billion in tax liabilities against large public groups, multinational corporations and privately owned and wealthy groups. This generated collections of $17.3 billion. Of the liabilities, $15.3 billion were raised against large public groups and multinationals.

Our system is undermined when people or organisations avoid their tax obligations. We welcome the continuation of the OECD two-pillar solution to multinational tax avoidance, which was started by the coalition and continued by this government. But this legislation also highlights an important point, as I mentioned earlier, about Labor's broken promises on tax. Those opposite often seem to think that election promises are there to be broken. We've seen many broken. No Australian has seen a $275 reduction in their electricity bills. No Australian has seen the cheaper mortgages promised by those opposite. They promised only to increase taxes on multinationals before the last election, and they have clearly broken that promise. They're raising taxes on superannuation. We know that for young Australians around half will be caught by what is proposed through a sneaky tax. Their excuse is: 'It's okay. They won't pay it until later.' The nature of superannuation is that you don't get the money until later.

Labor is taxing unrealised capital gains. Unrealised capital gains are just that—they are unrealised. So a small business that has unrealised capital gains will have to go and realise them. That means they have to sell their assets, and that means, whether it's a farmer or a small business with a piece of land that they operate on, they are going to have to sell that off. I've seen families in that position who are going to lose the assets that are the basis of their businesses. But they're not unionised businesses. They're not the kind of businesses that the Labor Party is particularly interested in.

Labor is increasing taxes on franking credits, and they promised they wouldn't do this, but they're banking half a billion in taxes from Australian companies and retirees. Ultimately this is all paid by Australian investors. Labor has ended small business tax concessions and decimated the instant asset write-off, all but burying the technology investment boost and ending loss carry-back measures. These are all important measures to encourage investment by the small- to medium-sized enterprises that are the backbone of our economy—or were. I hate to think where this is all going for small- to medium-sized enterprises in this country, but the position is clearly grim.

This is despite independent economist Chris Richardson predicting Labor will breach the coalition's tax-to-GDP cap in their first year in office. You don't beat a cost-of-living crisis—that's what Anthony Albanese called it, by the way, before the election. He doesn't call it that anymore. In fact, we've seen the Treasurer in the last week put out his wellbeing report, where he clearly ignored the mortgage stress that Australians are facing because he focused on the data on mortgage stress prior to 2021. He used data from three years ago. He came to the conclusion that there's no problem with mortgage stress because there wasn't. The problem is now, and he's burying that. He's trying to imagine that it isn't true.

The truth of the matter is that higher taxes will not help a cost-of-living crisis. Higher taxes will not help the fact that in the last 12 months labour productivity has collapsed by 4.6 per cent. That has never happened before. Labor's broken promises on tax won't help with the cost of living or collapse in productivity, but what we are seeing is that Australians are paying six per cent more for everything they buy than they were a year ago. Core inflation, at 5.9 per cent, remains amongst the highest of the advanced economies in the world.

Of course, that data just tells us what we know. We're seeing it every day on the ground: Australians are paying more for their mortgages, for their groceries, for their rent and for their energy bills. Australians are actually having to work more just to make ends meet, and we're seeing this in the data. They are working. They're taking on extra jobs. It means they can't pick up the kids after school, it means they can't go on holidays when they might have otherwise been able to and it means they don't get the family time they would otherwise want because that's the only way they are able to make ends meet. I see small businesspeople in particular who are dealing with these challenges, and the hours they're putting in are completely unsustainable—completely unsustainable. But when you're under this kind of pressure, this is the resilient nature of the people who go into small business in this country.

Meanwhile, the extraordinary thing about this is that the economy is shuddering to a halt. Of course, this is the answer that Labor has come up with to inflation: you just stop the economy. You stop the economy! That's what has happened: GDP per capita has gone backwards in the last quarter—it's negative. I see the member opposite shaking his head—

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