Allegra Spender (Wentworth, Independent) Share this | Hansard source

The tax system is the backbone of the Australian economy, supporting economic activity and funding government and essential services. But the tax system is not static; it needs frequent tinkering and occasional large-scale reform to ensure it is fit for purpose and meeting the objectives for which it serves society. This amendment, while likely to go unnoticed by many outside this building, is an important change. Economists estimate that the corporate tax lost from global profit-shifting has increased from 0.1 per cent of corporate tax revenues in the 1970s to 10 per cent in 2019. In Australia around one in three large public companies pay no tax in Australia, with revenue-shifting costing the budget around $5 billion each year. In an increasingly globalised world, it is essential that Australia is not robbed of its prosperity by multinationals using accounting tricks and low-tax jurisdictions to undermine our tax system.

The Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 will implement pillar 2 of the OECD model rules to impose minimum tax rates of at least 15 per cent on multinational entities, as agreed by 139 countries back in 2021. It will create less incentive for profit-shifting and is expected to increase Australia's annual tax intake modestly. While this is an important piece of legislation, I want to take this opportunity to outline the importance of large-scale tax reform and the growing momentum for change that I am experiencing as I conduct community consultation for my tax green paper.

Over the past 18 months I have been speaking to economists, business leaders, environmental groups and the social and community sector about the need for tax reform. There is actually broadscale agreement about that need and that the tax system needs to be set up for the future. As Ken Henry has said in a number of cases, we are facing an intergenerational tragedy where young people today face the burden of paying for climate change adaptation and mitigation—climate change that has been caused by previous generations—and they are carrying the burden of hundreds of billions of dollars worth of debt and structural deficits as far as the eye can see and facing the burden of dealing with a tax system that is strongly targeted to income earners. At a time when the population is ageing and resources are going to our ageing population in particular, this is a real challenge for young workers who will, if we retain our current tax system, take on more and more of that burden.

At the same time, because we have a low productivity environment at the moment and because we're not building and innovating in our business environment as much as we need to be, we have another challenge in our tax system, which is significantly about those business challenges as well. Those are some of the reasons, certainly, why the economists, the people in the business community and the people in the environmental community care about tax. It's because they care about the long-term prosperity of our country, they care about intergenerational fairness and they care about ensuring that we are doing everything we can to make this transition as cheap, as effective and as quick as possible. Tax plays into that.

But it's not just the experts, the economists and the business groups who see this; the community sees this too. Over the past month I've been conducting an online survey of my constituents in Wentworth to try and understand what the community's views are on tax reform. Our office has been inundated with almost a thousand responses, and I have been impressed by the thoughtfulness and understanding of the tax system that is evidenced through the responses.

In my electorate, 75 per cent of respondents believe that tax reform is a high priority for the government. This percentage increases to 85 per cent for those between the ages of 25 and 34. Young people are caring about this issue. Related to the intentions of this piece of legislation, many respondents outlined their anger with the ability of large corporations and, particularly, multinational companies to shift profits, so I believe they would support the intent of this legislation.

But, interestingly, the issue with the highest overall share of responses related to ensuring that revenues from the extraction of Australia's mineral resources are taxed appropriately, particularly when the prices are high. This was followed closely by the need to address taxes that contribute to the unaffordability of housing. Among younger respondents, there is a strong sense that the tax system is broken for them, particularly around these two issues. They are appalled that activities that are harmful and destructive to Australia's natural environment seem to generate limited tax benefit for Australians. Megan said:

… this country's resources belong to all of us and mining companies should be paying us to dig up the land, take them and export them.

Similarly, younger people are frustrated by settings that make it easier for people to buy an investment property than for them to buy their own home. Relatedly, Valerie highlights the disparity between income sources, saying there shouldn't be 'additional benefit from investing in houses versus working for income', because many people, particularly in younger generations, don't have the capital to back them to buy a home. They are just working for income, and they are concerned about the tax system's balance in this regard.

But it's not just young people calling out for reform. Many older people in my electorate live comfortably and have benefited from a tax system that has allowed and encouraged them to accrue wealth through superannuation concessions or housing. They have worked hard—and I pay tribute to that; they have worked hard, innovated and contributed—but they are also worried about what our settings now mean for future generations. They're concerned that they've climbed the ladder but that they're pulling up the ladder behind them. Of people aged 55 or older, 75 per cent also believe that tax reform is a high priority, which is consistent with the whole sample. As Chris, a man in my electorate over the age of 65, said:

Possibly the biggest problem Australia has the growing inequality, with housing being the best example … This will lead to fractures in the stability of our society.

One final point I want to touch on from this survey is the surprisingly high focus on innovation. In company with topics such as climate change and housing affordability, I was glad to see that innovation and productivity also featured prominently, highlighting the community's frustration with the government's inaction in addressing Australia's flatlining productivity growth. As Susanne puts it:

The promotion of investment and innovation is great but what is provided in tax benefits to achieve outcomes? The only increase is bureaucracy and more forms to fill.

While I appreciate that one electorate is not representative of the whole country, I think these results show that momentum is building for wider tax reform. Australians of all generations are increasingly seeing the connection between the challenges that they or their children face and that their grandchildren may face and the settings of the tax system. I welcome this bill and support the intentions of aligning global minimum tax rates to ensure that corporations pay their fair share of tax, regardless of where they're based. But more needs to be done urgently to address the other issues front of mind for Australians in which the tax system has an important role to play.

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