Tania Lawrence (Hasluck, Australian Labor Party) Share this | Hansard source

When multinational corporations pay less or no tax, ordinary Australian workers end up paying more. I rise to speak on the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and the associated bills. I do so knowing that there will be legislators in many countries speaking to congruent legislation at this time. These bills address tax challenges that have existed for many decades and which are exacerbated by the continuing digitisation and globalisation of the economy.

The global minimum tax will allow a top-up tax to be imposed on a resident multinational parent or subsidiary company where the group's revenue is taxed below 15 per cent overseas. The domestic minimum tax will likewise apply on any low-taxed domestic income. The purpose of these bills is to reduce the incentive that has for many years encouraged multinational companies to shift profits and revenue between jurisdictions by various artifices in order to exploit differences in taxation regimes and, by doing so, minimise the tax that they pay.

In his second reading speech, the assistant minister noted that we would be joining hands with countries like Canada, the EU, the UK and Japan, among 60 states that have already taken legislative action to address tax evasion. In June 2021 the G7 stated their support for this initiative, and shortly thereafter, in July 2021, 130 countries at the OECD meeting in Paris endorsed a global minimum tax rate of 15 per cent. In 2021 US President Biden stated that the agreement was 'an important step in moving the global economy forward'. There is some tension today in the US, with some not wanting to miss out on the changes and some not wanting the US to be an early adopter. The current administration's attitude is to do whatever it takes to get it done. We will need to wait and see how long it takes the US to join the party, but the momentum is there. Brazil is on board, Vietnam is introducing it and Kenya is considering the change.

We have a progressive tax system in place in Australia whereby we require those who have greater income to contribute more to the social good. The fact that for many years very large companies have made significant revenue in Australia and yet paid nowhere near the tax that they should have is a disgrace. The problem now accelerates as the economy digitises. This bill, in concert with the actions being taken by countries around the world, will reduce the incentive to shift operations to low-tax jurisdictions. The reduction of the tax advantages currently exploited by very large companies will in turn create a more level playing field and encourage and support the small and medium-sized businesses—many of them Australian—that currently find it difficult to compete. As Minister Leigh stated, suburban firms shouldn't have to compete with tax-dodging multinationals, and I quite agree. For years that unfair competition has been going on, and it is still going on, as I speak, be it in the Hay Street Mall in Perth, in Middling Gate or at the Ellenbrook shopping centre, in my seat of Hasluck.

This legislation will make Australia a more attractive place for international investment. It will be good for competition, not just here but around the world. It will take effect immediately, capturing income from the start of this year, with the first returns due in mid-2026. Since 2021, and before, companies have been on notice that this was coming. It will capture companies with a combined global revenue of 750 million euros, which is just over A$1.24 billion. Some of the companies that will be captured are Amazon, Exxon, Apple, Shell, Volkswagen, Alphabet, or Google, Toyota, Glencore and bp. It is salient to consider that many of these companies have annual incomes that eclipse many of the GDPs of independent nations. Walmart—the largest, perhaps—has an annual revenue larger than the GDPs of Thailand, Austria or Norway.

Let's unpack the example that Minister Leigh gave: Google's $19 billion of revenue in Bermuda in 2016. Leaving aside the fact $19 million of economic activity on an island of less than 54 square kilometres would undoubtedly destroy said island, we should never allow legal fictions to stand, because they always cause poor outcomes. Australians account for perhaps up to one per cent of the internet users of the world. On that basis, one per cent of that $19 billion of revenue was in reality created in Australia. That's $190 million that we just didn't see, or tax. If there was an Australian company trying to be competitive in search at that time, or since, how could they compete with Google?

Getting this law in place at this time, here and internationally, is crucial. Our economies are not going to be less digitised in the years to come. Without ensuring a level playing field, competition and initiative will be quashed, the revenue base will be eroded and economic equality and fairness will be further reduced. Some estimates put the annual loss of tax revenue due to the ongoing global shell game at 10 per cent. We need to bring this home to what it means for our local communities. When some of the very largest companies are making money in Australia but are not paying their way, it has a real effect on what should be the revenue collected by government each year, and so it has a real effect on the services that government are able to provide.

Evasion of taxation means less money for education in Hasluck. It means public schools will not have the facilities that they should have. Evasion of taxation means less money for health in Hasluck. It means that our local cancer treatment centre might not be able to meet the demand that presents to it and that local residents already facing hardship have to travel further and wait longer for treatment, making them sicker. Evasion of taxation means that competition is reduced everywhere in Hasluck, which means that a new venture that might have meant local jobs can't get a start because it just can't compete. The local cafe can't afford to stay open in the afternoon. Fewer tourists stop in the valley. In short, the economy is better and life is better when we don't have major global corporations freeloading on us.

Small, medium and large companies in Australia who do the right thing and pay their tax feel rightly annoyed when they see the large, very wealthy global companies getting away with what amounts to a deception played against the Australian people. In countries that are not as wealthy as ours, this practice of avoidance means a smaller pool of national income for projects designed to assist development across health and education and for other development goals. Our participation in this global effort, in partnership with other nations, will reap benefits far beyond our shores.

As Australians we don't like freeloaders. This government is taking action to ensure that anyone who wishes to hide from the tax obligations that we all share will find hiding more and more difficult and uneconomical as time goes on. We shouldn't have to wait for a leak of documents, like the Panama papers in 2016 or the Luxembourg leaks in 2014, before wealthy companies and individuals are made to meet their just tax obligations in the countries that they actually live, operate and earn income in. After the Panama papers, the ATO launched investigations that found over $140 million of unpaid tax liabilities. The Panama papers included historic references to BHP Billiton, Westfield, Alcan Corporation, ANZ bank and the National Australia Bank.

Many of the tax havens used by wealthy corporations and individuals are small islands like Bermuda or the Cayman Islands. The fact that these are Commonwealth territories is embarrassing. The EU is fully behind the changes, yet Luxembourg, a founding member of the EU, has been a low-tax environment for many years and is utilised by many companies within Europe for that reason. Money talks.

The major reason change has been so slow to come in this field is that there are many economically powerful corporations and wealthy individuals who have concomitant political clout and are well motivated to sustain the status quo for as long as possible.

Apparently the Cayman Islands are lovely. There's scuba diving on shipwrecks and crystal clear waters. Above sea level, things are not so crystal clear, though, with more companies registered there—a hundred thousand—than there are residents. I trust that there are currently no Australian politicians who have interests invested in the Cayman Islands or like havens.

The member for Hume, in his speech on the bill, did manage for about three vainglorious minutes to speak in favour of it, and so I expect the bill will have support across the House. He spent the remainder of his time speaking on irrelevant matters related to his own political interests. It seems to me that on a matter of such importance we should try to confine our remarks and our amendments to the causes and scope of the legislation, and I hope other members opposite will do better.

The member for Hume likewise moved an amendment. This is serious legislation, yet the amendment proposed by the member for Hume is an incoherent ramble that does not in fact address any part of these bills. I can only hope that no unlucky legislator in another country, casting about to see what others are saying about this landmark global legislative change, accidentally comes across the member for Hume's amendment and tries to understand how on earth that has any relevance to the bills. The member for Hume should be careful not to waste the time of innocent legislators and their staff overseas, and he certainly shouldn't be wasting the time of this parliament either. I will be voting against the feckless amendment from the member for Hume.

The former coalition treasurer Josh Frydenberg appeared to support these global rules. It is unclear how much support he received from former prime minister Morrison. In any event, the adoption of this legislation has been Labor policy since before 2022, and the coalition simply didn't get it done. As in so many other areas of policy, such as the NACC and environmental law, they now have a chance to support legislation that they had every chance to enact but dragged their feet on or ignored. The coalition years were a litany of lost opportunity.

Transparency and the availability of good data are essential to planning and to good policy, and this is true in any area or field. Tax transparency is part of the social contract that businesses have with the communities in which they operate and make money. This is true whether the business is a sole practitioner working from home in Midland, a distillery in the Swan Valley that employs 20 people or Google, with annual revenue of US$305 billion. At the end of the day, delivering value for shareholders can never be done at the expense of the communities within which that value is created.

This is good legislation, and it evidences Australia's commitment to a better, fairer and more equal economic global order. Ernst & Young described the introduction of this regime as a significant shift in global taxation. Australia has been a firm champion of the global 15 per cent minimum tax rate on multinationals. By enacting this legislation now, we will be among a strong group of first movers, the actions of which will bring other nations more quickly to agreement and cooperation. I support the bill and look forward to seeing the intent of this legislation supported across this parliament and across the world.

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