Luke Gosling (Solomon, Australian Labor Party) Share this | Hansard source

During the 2022 election campaign, the Albanese government committed to ensuring that multinationals would pay their fair share in tax. This legislation levels the playing field for Australian businesses and increases transparency. These reforms will hold companies to account on their corporate structures and whether they are operating with opaque or atypical tax arrangements.

Given the global momentum towards ensuring firms pay their fair share of tax, it is in the public interest that shareholders have more information of this kind. The measure in schedule 1 of the bill targets Australian public companies, listed and unlisted, to disclose their subsidiaries and where they are located. This will hold companies to account, particularly the large corporate groups, requiring them to be more transparent about their corporate structures and about whether they are operating with opaque tax arrangements, such as through subsidiaries located in low-tax jurisdictions. Companies will disclose this information as part of their annual financial report, helping to reduce compliance burdens. This is in line with international approaches. For example, in the UK, they have a similar measure already in place.

Schedule 2 of this bill is a revenue-raising measure. It targets a known tax-planning arrangement by limiting multinational enterprises' debt deductions, ensuring they pay their fair share of tax in Australia and helping level the playing field for Australian businesses. Because debt is tax deductible, multinationals can adjust their debt levels and use related borrowings to minimise the amount of tax they pay. The increasing occurrence of this tax avoidance practice has resulted in international efforts, led by the OECD, to address tax integrity risk and directly limit debt related deductions. Most OECD countries, such as the UK, the US and most of the European Union, have already implemented earnings based interest limitation rules. The proposed thin capitalisation amendments in this bill will bring Australia in line with these jurisdictions.

We have to do a lot more on multinational taxation. We have two-fifths of multinational profits currently booked through tax havens, which is an incredible amount. We've got some $100 billion of Australian money sitting in tax havens, places like the Bahamas and Panama, where there are very low tax rates and where, on one estimate, four-fifths of the money is there in breach of other countries' tax laws. These aren't just tax avoidance mechanisms, these are also the places where terrorists, kidnappers, crime syndicates and drug lords store their money. We have to crack down on those tax havens because they're a cancer on the global tax system.

In Victoria, we had the incident a couple of years ago of the Stawell tyre dump being transferred to a company in Panama in order to avoid their clean-up obligations. Some nine million tyres were sitting at that dump, and the owners attempted to shift ownership offshore to Panama—to a tax haven—and thereby avoid their liabilities. It's the sort of problem that Labor wants to address—not only this sort of corporate behaviour but also, as an aside, to introduce a circular economy, where an owner of nine million tyres would see them as a great asset to be recycled and used as crumbed rubber to make our national regional and rural road system more resilient. But I digress.

Over nearly a decade in government, the coalition tinkered around the edges. They made tweaks here and there, but throughout their term they very clearly showed which side they were on. When I think back, there might have even been a prime minister in the past, and other members of former coalition governments—I can't quite recall the details, but there was certainly use of tax havens. It has certainly been clear to us, and to a lot of Australians, that over the last 10 years we've seen that those sitting opposite were sitting there partially because they weren't on the side of Australians. They were on the side of multinational tax dodgers. Before the 2022 election, they told Australians not to support anyone who proposed to raise taxes on multinational tax dodging. Just think about that for a second. Labor takes the view, however, that the international group of more than 100 countries that came together in 2021 to strike a deal on global taxation has made a step in the right direction. As the Australian government, we're now working to see those measures implemented.

The coalition have been walking away from the issue of multinational taxation despite this being deeply unfair to Australian firms. If you're a new start-up business, you're not banking your money in the Bahamas, you're not looking for an accounting lurk to run through the Cayman Islands and you don't have an army of lawyers and accountants to seek out every loophole. Instead, you're working hard every day to try and come up with a new business model so that your business can survive and thrive. But right now, you face the potential of being cheated by multinational firms and tax dodgers who are using tax havens. So we have a lot more to do to level the playing field and support those Australian businesses. You just need to look back at the history in this space.

The coalition voted against our multinational tax measures when we were in office last time—including one measure which saw Chevron paying an additional $300 million in tax. I'm sure all local members can think of great ways that they could use hundreds of millions of dollars of revenue for Australians in their electorates. When those opposite came to office, they abandoned multiple multinational tax measures which were ready to go, and they were on the go-slow—a very go-slow—on multinational taxation while in office, which was for 10 years.

Labor has a strong track record in this space. The last leap forward on transparency was introduced by the Gillard government in 2012. Then Assistant Treasurer, David Bradbury, put in place the legislation that has ensured public transparency of tax payable by large corporate entities. The landmark changes allowed for the publication of the tax liabilities of large corporate entities, including multinational corporations. Then we had almost a decade of inertia on transparency and the on-again off-again approach to multinational tax integrity by those opposite. In the nine years from 2013 to 2022 leaders around the globe stepped up efforts to crack down on international tax avoidance by large companies and high-net-worth individuals. We had the Panama papers, the Lux leaks and the Paradise papers all reveal the deliberate sophisticated tactics global companies had been using to shift profits around the world in order to pay less tax. The problem of multinational profit-shifting is a massive one. Globally around $600 billion of profits are estimated to be shifted to tax havens. That's almost 40 per cent of all multinational profits.

Yet the first thing the coalition did when they came into government was to hollow out the tax office, sacking 4,700 staff—fewer people to be looking into these sorts of behaviours. Two years into government they realised how much that was costing them and they set up a task force to plug the hole. They claimed the task force would restore billions in revenue, but that claim just highlighted how much the cuts they'd made to the tax office had cost Australian taxpayers. It had not occurred to them that depleting the workforce that were meant to be policing the tax affairs of global multinationals would come at a huge cost to the Australian tax base, so they announced a bold new tax avoidance taskforce and hoped no-one would notice they were just fixing the problem caused by their own cuts to the tax office. Funding that task force remained their go-to on multinational tax integrity even up until the 2022 election. It was their only idea, and it was generated out of the own goal they scored when they first cut back tax office staff.

In 2012 the coalition even voted against the Labor government's laws to close a multinational tax avoidance loophole. They said it was retrospective and they couldn't support it. Was it retrospective? No, it wasn't. They were wrong again. But they still cast their votes against closing that multinational tax avoidance loophole. Then in 2017, with the coalition in government, that very same law was used to secure a $340 million judgement against Chevron—another mistake, but no contrition. They just patted themselves on the back. We even had the spectacle of former prime minister Morrison, the then Treasurer—he didn't have any other ministries at that stage, I don't think—claiming credit for a court outcome based on laws he actually voted against. (Quorum formed) I was reflecting on the spectacle of former prime minister Morrison, who was the then Treasurer, claiming credit for a court outcome based on laws that he actually voted against.

In 2013 the Labor government introduced the biggest ever package to crack down on multinational tax avoidance. What did the coalition do? They voted against it. Labor introduced changes that increased tax transparency by allowing for the annual release of corporate tax transparency data from our largest and wealthiest firms, and the coalition voted against that too. The coalition have taken a meandering path on tax transparency, but they never end up taking us forward. In 2016 they were committed to a register of beneficial ownership to tackle the problem of Australia's unusually opaque share registry, but nothing ever happened. In 2019 the coalition had to admit close to the election that, actually, they'd killed off the idea.

Those opposite might be sitting there thinking, 'Oh, that's Labor going back over what we did in 10 years or'—more to the point—'didn't do in 10 years,' but it is important to reflect on not only what we're doing on making sure that multinationals pay their fair share but what those opposite didn't do over 10 years.

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