Peter Khalil (Wills, Australian Labor Party) Share this | Hansard source

Across the country, Australians are struggling with the cost of living. It is a real issue that people feel every day. A lot of my constituents are reaching out to my office for assistance. Since I became the member for Wills in 2016, people across my electorate have shared that their aspirations for good-quality, affordable housing have become more and more out of reach. It's a story that's reflected, I think, across Australia, and it's not new. It's an issue that has been deepened, frankly, by 10 years of inaction from the previous coalition government. They inflicted immense damage on the economy and our country's fiscal position, which we've had to rectify. As usual, it takes a Labor government to come in and begin the hard work of repairing the damage—the damage that the Abbott, Turnbull and Morrison years inflicted upon ordinary Australians. That's why we've delivered two surpluses in a row.

This could not be clearer when we consider how the coalition completely abrogated its responsibility for multinational corporations' tax avoidance. For a decade the coalition government sat on the treasury benches and allowed the issue of tax avoidance to fester. They ignored clear advice and efforts at international collaboration that had been championed by the last Labor government, the Gillard government. The Albanese Labor government is finally delivering this action and developing a coordinated approach to address this key issue. Why? Because the Albanese government believes that a fairer tax system is better for all Australians.

Now, you can't hide your profits or your revenue if you've got a local cafe in my electorate—if you're a Pascoe Vale or a Brunswick cafe owner. You're not able to hide your revenue in a subsidiary on the Cayman Islands. No cafe owner can do that. No small-business person can do that. They are paying their fair share of tax. The average punter is paying their fair share of tax, whether they own or run a small business or whether it's their salary or their wages. They can't hide from the taxman what they make. Yet the multinationals can and do and have done so. That's why the Albanese government believes in transparency and global coordination on multinationals tax avoidance—because the system has been gamed internationally for too long. This is about ensuring that the profits of multinational companies are not hidden offshore and that they pay their fair share of tax so that it can go back into our budget and deliver the services that the Australian people need.

To support the government's effort to crack down on multinationals tax avoidance, the government is introducing the Taxation (Multinational—Global and Domestic Minimum Tax) Bill. This legislation delivers on the government's election commitment to ensure multinationals pay their fair share of tax by implementing a 15 per cent global and domestic minimum tax rate. It forms part of a coordinated approach across more than 130 countries to implement the OECD-G20 two-pillar solution, a 2021 international agreement to address the tax challenges that have been coupled with the rise of the digital economy. This bill also responds to the problem of large multinational corporations seeking to reduce tax by shifting profits from Australia to low-tax or no-tax jurisdictions such as the Cayman Islands, pretending that their headquarters are there, even though they're making the profits here. This effectively erodes Australia's tax base. It reduces the money that can be invested into the vital services that Australians rely upon every day.

To respond to the challenge of profit shifting, the government announced in the 2023-24 budget that we would implement a 15 per cent global and domestic minimum tax for multinational corporations with an annual global revenue of at least $1.2 billion. If they're making billions in revenue and profit in Australia and then pretending that their headquarters are elsewhere, in a low-tax jurisdiction, so that they pay zero tax in the dollar on the money that they make here, they're not going to get away with that anymore. They got away with it for 10 years under the previous government. Those opposite sat on their hands for 10 years. They decided to take no action.

The previous speaker, the member for Riverina, talked about the former treasurer Josh Frydenberg and all these great things the coalition did. They did nothing. Multinational corporations were making billions of dollars in this country—hundreds of millions of dollars—and paying next to no tax. Some of them paid zero. Some of them were able to reduce their tax bills down to 1c or 2c in the dollar because their headquarters were somewhere else—in jurisdictions where they were supposedly paying tax, which happened to be low-tax or no-tax jurisdictions. It's a scam. It's a way to avoid the responsibility of paying your fair share of tax. It's a way to avoid being like the cafe owner or the ordinary Australian punter who pays 25c or 30c in the dollar, whatever their tax bill is. They can't hide from that; the tax office follows them up. But these multinationals can make $900 million in Australia and pay five per cent, or two per cent, because they've shifted their profits or they have a low-tax-base headquarters.

This is an important step, and it's part of the government's broad and ambitious tax reform agenda. When multinationals pay less, Australian individuals and Australian small businesses pay more, and it's not fair. It's actually unfair. Fundamentally, for decades, billions of dollars in taxes that should have been paid here in Australia have not been paid. Under the former government, they got away with billions of dollars of unpaid tax. That money could have gone into schools, hospitals, roads, public transport or mental health. It could have gone into so many things that make a difference to people's lives, and yet the coalition allowed the profits to just wander off to the Cayman Islands or wherever it was, with no tax being paid here, even though the money was made in Australia. We need to ensure that these multinationals pay their fair share so government can invest in the services that our communities need, and that's what we are doing.

This is also an important step forward in ending the race to the bottom on global corporate tax rates. By ensuring that multinationals pay their fair share around the world, we are securing Australia's tax base so we can support Australians and Australian small businesses and make our economy more competitive. This required a commitment, a diplomatic effort and an engagement with other countries, and we have taken that step as a government. The last leap forward on transparency and global cooperation on taxation was introduced back in 2012 by the Gillard government. Then we had Sleepy Hollow for 10 years under the coalition. They did nothing. The previous speakers talked about a couple of little peripheral changes here and there—they did something on thin capitalisation, this and that. Guess what! Tens of billions of dollars, probably a lot more, did not go into the Australian budget, because the then government, now opposition, did nothing about it.

There have been 10 years of inaction and inertia. Between 2013 and 2022, while leaders across the globe bolstered efforts at international cooperation, what did the coalition government do? It turned away and sat on its hands. There were mounting calls for international coordination in the wake of the first Panama Papers, then the LuxLeaks, then the Paradise Papers, all revealing widespread and sophisticated efforts by individuals to avoid tax. And still the coalition failed to act. This was despite warnings of this challenge from everyone and every organisation, including the IMF and the World Bank Group President. And the first thing the coalition did when they came into government back then, after the Gillard government—you know what it was? What was the first thing they did? It was not to try and engage with or tackle this problem. They sacked 4,700 ATO workers. Oh, that's going to help! Let's just completely denude the very people that we need to work on this problem!

Then you have former Treasurer Joe Hockey's pledge to end the age of entitlement. Guess what? The age of entitlement was actually accelerated for the big corporates and multinationals. The research shows—and I alluded to this earlier—how many billions of dollars went begging. How many billions of dollars that should have gone to the Australian people through Australian government services went offshore? Does anyone know?

An honourable member: A lot.

The member here says, 'a lot'. I'll tell you, Deputy Speaker. The estimates are that around $600 billion in profits were shifted into tax havens just in that period of time. What do you reckon we could have done with that as a government and a nation to address inequality and the needs of the Australian community? We could have done quite a lot, actually. That's accurate. What they did when they were in government was to allow these multinationals to lean on the loopholes in our tax system while ordinary Australians were forced to lift the heavy burden. Your mum and dad small-business owner, your punter working at Woolies and paying their taxes, your salary earner, your wage earner—they were doing the heavy lifting while the big multinationals just flew like a dragon with their booty and their loots and deposited it over in their low-tax or no-tax haven on some island in the Caribbean. Those opposite stood by and watched that happen. No—they helped them. They facilitated it. They didn't care.

Despite the pitiful effort or lack of effort that was made by the coalition to take this problem seriously, actually do something about it and make a difference, it has taken us, the Albanese Labor government, to deliver on the international best practice to ensure a fairer and more transparent tax system. This legislation will be peer reviewed. Advice will be given to the OECD to ensure it is consistent with other jurisdictions to end that race to the bottom. Implementing this global minimum corporate tax will also allow the government to apply a top-up tax on large multinationals operating in Australia where their overseas income is taxed at lower than the 15 per cent rate. Implementing a domestic minimum tax complements the global minimum tax and ensures that Australia, rather than other jurisdictions, collects revenue from locals under taxation. By making multinationals pay a minimum effective tax rate of 15 per cent, the OECD estimates annual global revenue gains of over $300 billion. Australia, under the Albanese government, is joining other countries, like the UK, Canada, Japan, South Korea, the EU and other jurisdictions, in implementing this global minimum tax from 2024.

But that's just one part of Labor's larger plan when it comes to the tax system. The government has also delivered enhanced public scrutiny of tax information, which will give the parliament and the public better information about the amount of tax multinationals are paying in Australia. Providing that transparency is at the heart of our tax reform. Under this government, public companies listed and unlisted will now be required to disclose information on the number of their subsidiaries and their country of tax domicile. This will increase transparency on their corporate structures and on whether they are operating with opaque tax arrangements. We'll flush that out. It's about holding companies to account on their corporate structures. Some do the right thing, but for too long under the previous government, as I said, many of them made off with the booty to their low-tax or no-tax havens, and that's unacceptable.

The government has also introduced legislation to bolster country-by-country reporting to ensure deeper co-operation on an international issue and deliver greater accountability to those multinationals. In addition, the Albanese government has strengthened the funding for the ATO's Tax Avoidance Taskforce by $200 million a year over four years. This is another aspect of how the government's transparency agenda will deliver greater accountability, and it's backed up with real action and increased funding so the ATO has the resources it needs to deliver on the government's agenda.

Multilateral taxation coordination is not a phrase that usually makes it to the front pages of the paper, depending on your choice of reading, but it is an issue that I have been personally and professionally involved with for many, many years, because what was happening was fundamentally unfair. Billions of dollars could have gone to services for the Australian people, but they didn't because multinationals were not paying their fair share of tax. I worked on these policy issues and the great work that Jim Chalmers, the now Treasurer, and Andrew Leigh, then the shadow Assistant Treasurer, worked on when we were in opposition. We're delivering now in government. That's what governments do. They deliver and make a difference.

In this place, we care about the real-world implications of these policies. I know there are hardworking businesses in my community. Whether they're in Fawkner, Hadfield or Oak Park, a cafe owner who pays their fair share will know that there's going to be real transparency and accountability and that the multinationals will not get away with not paying their fair share. They work hard. They have put blood, sweat and tears into their small business or the work that they do, and it's about ensuring that they don't pick up the slack left by multinationals and their armies of accountants who shift profits to tax havens overseas. It's about ensuring fairness in the system. That's why this government is committed to being a leader on the international stage when it comes to multinational tax avoidance and minimum rates of global tax. That's what we're doing and we will not allow this issue to be kicked into the long grass.

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