Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

I supported the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill in 2023 as I believe in the principles of fairness. This is a belief that is shared and resonates across Australia. Working Australians see their hard-earned dollars whittled away by taxes while multinational companies that are earning millions, and in some cases billions, pay little or no tax, and they have every right to be frustrated and angry. The 'making multinationals pay their fair share' bill was just one positive step in a process of urgently required taxation reform. This bill supports a coordinated, global effort to set a 15 per cent global minimum tax and domestic minimum tax for all multinational enterprise groups with an annual revenue of at least $1.2 billion. While the changes are only expected to increase domestic taxation revenue by $210 million over the forward estimates, it is the indirect impact that is of greater importance. Assuming cost-shifting and other tax mitigation measures secured in this place are effective, multinationals must now carefully consider other factors, such as sovereign risk, industrial relations, environmental laws, intellectual property risks and security against local taxation conditions.

A multinational may accept a high degree of risk in undertaking a business in one country if the tax is sufficiently low. However, this equation quickly changes when the tax rates are equalised. Under the proposed arrangements, supported internationally by 135 countries, a minimum 15 per cent tax is applied. When the threshold is not met, it triggers either a top-up tax in the originating jurisdiction or a top-up application in the headquartered country, depending on the effective tax rate. The effect of this is twofold. A multinational entity may decide that a higher business risk in a particular country is no longer worth it without the benefit of the lower tax rate. Consequently, countries such as Australia with a higher corporate tax rate but lower sovereign risk become more attractive. Companies domiciled in Australia also benefit from multinationals that choose to remain in lower-tax countries. They'll see their taxes increase, and this tax gap reduction between Australia and other countries bridges some of the cost disadvantages of operating in Australia.

Equalising or at least bringing business costs closer, irrespective of where the business is domiciled, can't come at a more important time. Across Australia, corporate insolvencies are surging, as inflation, cost of living and energy prices are taking effect. In the last 12 months, insolvencies exceeded 10,000 for the first time since 2013. The trend is alarming. For the first nine months of the financial year, insolvencies rose by 36.2 per cent on the previous corresponding period. Monthly filings reached 1,137 insolvencies in March 2024. That was a record until May, when 1,249 new cases were initiated. While most of these companies are local, the benefit of a globally [inaudible] tax system will result in more companies investing or relocating their operations to Australia, with flow-on effects to the local economy. It is also reasonable to conclude that some of the $976 billion—nearly a trillion—in outbound foreign direct investment emanating from Australian businesses in 2022 would be redirected into Australia, creating local jobs and local opportunities. This bill provides improved fairness across the global economy. It is an appropriate reform and one that I certainly support. I thank the House.

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