Sam Rae (Hawke, Australian Labor Party) Share this | Link to this | Hansard source

The challenge of taxing multinationals is not unique to Australia. It's a global issue that requires a coordinated international response. The rise of the digital economy, the increasing mobility of capital and the complex nature of multinational enterprises have outpaced the capacity of traditional tax systems. As a result, governments around the world have found themselves grappling with how to ensure that large corporations pay their fair share of tax.

I'm very proud to say that Australia has been at the forefront of these international efforts. As part of our 2023-24 budget, we announced that Australia would join a group of first movers to implement both a global minimum tax and a domestic minimum tax of 15 per cent. Applicable to multinational enterprises with an annual global revenue of approximately $1.2 billion or more, this tax will ensure that large multinational corporations pay a minimum level of tax on income generated in each jurisdiction where they operate. By cooperating with our international partners to set a floor on corporate tax rates, the Albanese Labor government is reducing the incentive for multinationals to engage in aggressive tax planning and profit shifting. This will not only protect Australia's corporate tax base but also make our country a more attractive place to invest. In a world where capital is increasingly mobile, having a stable and predictable global tax environment is crucial for attracting long-term investment and fostering economic growth.

In addition to a global minimum tax, this legislation—the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and related bills—also implements a domestic minimum tax which will give Australia additional taxing rights on the low-taxed Australian income of large multinational groups. This is a critical safeguard to ensure that Australia collects revenue from local undertaxed profits.

This is not just about protecting our revenue base; it is also about fairness. It's about ensuring that all businesses—whether large or small, domestic or multinational—contribute their fair share to the society from which they benefit. It's about creating a level playing field where businesses compete on the basis of innovation, efficiency and service, not on their ability to exploit loopholes in a tax system.

These measures form just one component of the Albanese Labor government's strong agenda on multinational tax avoidance. We understand that such a complex issue cannot be tackled with just a single piece of legislation. That's why we have already delivered four separate multinational tax reforms with a further five to come alongside the global and domestic minimum taxes.

One of the key reforms we've already delivered focuses on increasing transparency around corporate structures and tax arrangements. Multinational corporations often operate through a complex web of subsidiaries and affiliates, making it difficult for tax authorities to track where profits are being generated and where they are being taxed. To address this issue, the Albanese government has introduced a new subsidiary disclosure law, which requires public companies to disclose information on their subsidiaries and their country of tax residency. This will shine a light on how companies structure their subsidiaries specifically for tax purposes and will increase transparency on corporate structures and whether they are operating with opaque tax arrangements. This reform is a significant step in our efforts to combat tax avoidance. By requiring companies to disclose this information, we are providing tax authorities with the tools they need to identify aggressive tax-planning strategies and ensure that companies are paying their fair share of tax. At the same time, we're sending a clear message to multinationals that they must operate with transparency and accountability if they wish to do business here in Australia.

Transparency alone is not enough. We must also ensure that companies benefiting from government contracts are contributing their fair share of tax. That's why, as part of the Albanese Labor government's Buy Australian Plan, we've implemented the Fair Go Procurement Framework. This framework requires companies tendering for government contracts valued above $200,000 to disclose their country of tax residency. The Fair Go Procurement Framework is about ensuring that taxpayer dollars are spent on companies that are good corporate citizens. Companies that benefit from government contracts have a responsibility to contribute to the public purse, and this framework ensures that they are meeting that responsibility. It's a remarkably simple principle: if you want to do business with the Australian government, you must pay your fair share of tax.

As part of our broader multinational tax integrity agenda, we are also progressing legislation to create a public country-by-country reporting register. This register will require certain large multinationals to disclose their tax affairs on a country-by-country basis, providing greater transparency as to where they are paying tax and where they are generating profits. In addition to country-by-country reporting, we're also implementing a public register of beneficial ownership. This will require companies to disclose who ultimately owns or controls them, providing further transparency and making it harder for individuals to hide their wealth through complex corporate structures. This reform is a critical tool in the fight against tax evasion, money laundering and other forms of financial crime. By shining a light on who owns and controls companies, we're making it harder for individuals to hide their assets and evade their tax responsibilities. This is about ensuring that everyone, regardless of their wealth or status, pays their fair share of tax here in Australia.

One of the most common strategies used by multinationals to minimise their tax liabilities is thin capitalisation, where companies artificially inflate their interest expenses through related-party debt. This reduces their taxable income here in Australia, allowing them to shift their profits offshore. To address this, we've tightened Australia's thin-capitalisation rules, reducing the ability of multinationals to engage in this practice. These reforms will ensure that interest deductions are more closely aligned with the economic substance of the debt and that multinationals are not able to exploit the system to avoid paying their fair share of tax. Furthermore, as part of our multinational tax integrity agenda, the Albanese Labor government is introducing a new royalty penalty for significant global entities that avoid Australian royalties withholding tax. This penalty will ensure that large multinationals cannot avoid their tax obligations by understating the value of royalty payments or disguising them as some other kind of transaction.

The fight against tax avoidance requires not only strong laws but also remarkably strong enforcement. That's why the Albanese Labor government has increased funding for the ATO's Tax Avoidance Taskforce, extending its operation and increasing its resources to crack down on tax dodging by multinational enterprises, large Australian public and private groups and extremely wealthy individuals. Since its inception, the Tax Avoidance Taskforce has been instrumental in detecting and deterring tax avoidance. It has generated billions of dollars in additional revenue and has sent a strong message to those who seek to evade their tax responsibilities. By providing the ATO with the resources it needs, we're ensuring that the taskforce can continue its vital work and that those who try to cheat the system are held to account.

The economic impact of these reforms cannot be overstated. Economists estimate that close to 40 per cent of multinational profits, which is roughly equivalent to around $900 billion, has shifted to low-tax countries each and every year. This has a devastating impact on the revenue base of countries like ours, where corporate tax comprises a significant portion of our total revenue. The OECD estimates that, by making multinationals pay a minimum effective tax rate of 15 per cent, annual global revenue gains could exceed $300 billion. For Australia, the benefits of these reforms are crystal clear. By ensuring that multinationals pay their fair share of tax, we're protecting our revenue base, levelling the playing field for Australian businesses and ensuring that the benefits of economic activity in Australia are shared more broadly with the Australian people. At the same time, we're positioning Australia as a leader in global tax reform and setting a new standard for transparency, fairness and accountability in the international tax system. I commend the bill to the House.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

There are some aspects of the member for Hawke's speech which I earnestly agree with. If you do business in Australia and with the Australian government, yes, you should pay your fair share of tax. There's no question about that. For many multinational entities operating in the global village that the world is today, as long as they have a big team of accountants, lawyers and smart financial people, they have unfortunately been able to avoid paying the tax they should. This is of concern.

We as a coalition welcome the continuation of the Organisation for Economic Co-operation and Development's two-pillar solution to multinational tax avoidance. This was started by the coalition. It's being continued by the government. We very much committed to the two-pillars solution in October 2021. This commitment was based on securing an exemption for resources and financial services companies from the framework so that Australia's tax base would not be eroded. The landmark agreement to secure such negotiations, considerations and outcomes was championed by former coalition finance minister, Senator Mathias Cormann, in his role as OECD Secretary-General. He began that particular position in June 2021.

We took extensive action over nine years of government between 2013 and 2022 to address multinational tax avoidance. As the G20 host in 2014, Australia played a leading role in the original project to ensure that there was a clampdown on multinational enterprises and entities doing what they had done previously for many years, and that is avoiding tax. For every business I know—and I ran a small business—the object of the business is to earn money and employ people.

A division having been called in the House of Representatives—

Sitting suspended from 10:13 to 10:29

When you run a business, it's your job to continue that business's success. If you don't, you then end up having to qualify to ASIC and other entities why you're running a business at a loss, and you can't do that beyond three successive years. The objective is to minimise tax, but in the right and proper way—the legal way—and, as I said before, to employ people to provide a good or service; almost all Australian companies do just that. But multinational entities, because of the swathe of financial advisers and lawyers and other people they have, have made an art out of not only minimising tax but avoiding tax. When you avoid tax, you are stopping vital funds going to governments at various levels to pay for roads, hospitals and schools, and you are avoiding paying your fair share. I remember that, when I was in business, the more GST I paid the better I knew our company was going because we were getting those receipts in, and when you get receipts in tax receipts go out. You feel a sense of pride because you're employing people and providing a good or service, and you're contributing to the wealth of the nation, the Commonwealth. That is the right thing to do.

As I said, the coalition took extensive action in our three terms to ensure we addressed multinational tax avoidance.

Government members interjecting—

We did—much to the mirth of those opposite. They weren't all here; I know, because I was the Deputy Prime Minister at the time. I know the role that Senator Cormann, as I mentioned previously, and successive treasurers, including Frydenberg, and Morrison before him, played in making sure we addressed this issue not only at home but also abroad in various fora around the world such as the G20, to crack down on multinationals who wanted to avoid paying tax at all by shifting money from Australia to elsewhere.

Under the coalition, Australia was an early and vigilant adopter of the OECD G20 base erosion and profit shifting recommendations. These provisions establish a multilateral approach to prevent tax avoidance and increase tax transparency to tax administrators—and it's a big job, a massive job, particularly when you've got overseas entities, huge companies, coming in with their various tax avoidance measures. I know the Greens are anti-business with their policies. If they had their way, goodness knows what mess our financial system would be in; they're very anti-big business. You have to be pro-business, whether it's international, large, medium or small. Government's objective is to create the environment in which businesses can not just survive but thrive.

I have been, I have to say, disappointed at some of the reckless policies brought in by the Labor government which have, I believe, been anti-business. It's not just me; I've talked to any number of chambers of commerce and to businesspeople who run large and small companies, and they are concerned as well about the business environment in which Australia operates and which the Labor government is overseeing. I was very interested to see the member for Chifley—the industry minister, no less—talk about lowering the corporate tax rate; he was quickly brought to heel and reprogrammed when the Treasurer didn't necessarily agree with his philosophy on providing a fairer corporate tax rate.

I was proud, when I was the small-business minister, to follow on from the good work by the former member for Higgins, Kelly O'Dwyer, and no less than Bruce Billson, who is now the Australian Small Business and Family Enterprise Ombudsman. While I was the minister in that important portfolio, the tax rate for business came down to its lowest rate for around seven decades. I worked closely with former treasurer Hockey and his successors to ensure that we did provide the framework, the landscape and the environment in which businesses could prosper.

The coalition government's measures included introducing the diverted profits tax, which limits a company's ability to shift profits out of Australia—that's so important—and introducing the multinational tax avoidance law, which ensures companies do not avoid a taxable presence in Australia. We also strengthened the thin capitalisation rules, strengthened transfer pricing rules, doubled the penalties for tax avoidance and established the ATO's Tax Avoidance Taskforce. I commend what the Australian Taxation Office does in this space. That particular taskforce, which was created on 1 July 2016, enforces existing laws and supports the government of the day's new tax avoidance measures that we put in place. Its work continues. It targets multinational enterprises, large public and private groups, and wealthy individuals, as it should.

From 1 July 2016 through to 30 November 2021 the ATO raised—wait for this; this is a big figure—$24.2 billion in tax liabilities against large public groups, multinational corporations, privately owned companies and wealthy groups. This generated collections of $17.3 billion. They're big figures. That pays for a lot of the aforementioned roads, infrastructure, hospitals and schools. It filters down through to the states, making sure that we have the services and amenities that we should provide Australian taxpayers and others besides—Australians who do pay their fair share, Australians who don't have the benefit of large teams of accountants, compliance officers, legal eagles and the like to avoid paying tax. Interestingly, $15.3 billion of the liabilities were raised against large public groups and multinationals, and $13.6 billion of the liabilities and $9½ billion of collections are attributable to the taskforce.

Our system is very much undermined when people or organisations avoid their tax obligations. In one sense, paying tax is something that people should have a sense of pride in. It means that their company is making a profit. It means that what they're doing as a company is succeeding. It means that they're doing the right thing by the country, which puts the framework around them and supports them, and it means that they're doing the right thing by their customers.

This legislation also highlights an important point in that Labor has broken its promises on tax. At the last election Labor said one of its main focuses was to be on addressing multinational tax avoidance, and I'm not quite sure that it has actually met that remit. They haven't done it right. Labor's shambolic handling of country-by-country reporting and changes to thin capitalisation—something I mentioned previously—has been shown up again and again. The Treasurer said, 'We have made it very clear we don't have any proposals for tax increases, beyond working with other countries to make the multinational tax regime fairer,' but I don't think they've met their obligations in that regard.

What Labor has done is raise taxes on superannuation. That's something they said they wouldn't do. But we know that Labor likes tax. They like jacking up tax. They are taxing unrealised capital gains. I tell you what: if you don't believe or agree with what I'm saying, go and talk to a worried farmer. Their farm might be worth a certain amount now, and over time the value of that land increases. What Labor wants to do and has proposed to do is to make that farmer pay an unrealised capital gain on that farm before the farmer has even decided to sell the farm. That not only creates complications for the farmer and how they're doing their business but also generates complicated work for accountants. It slugs the farmer unfairly. She or he has not actually sold the farm, but they're having to pay an unrealised gain. It's bonkers. It's absolute nutty policy. But we know how uncompetitive our farmers are under Labor laws. It's an anti-agriculture government, let's face it.

Labor is increasing taxes on franking credits. It didn't work quite well for the member for Maribyrnong when he was the opposition leader and decided he would attack franking credits during the 2019 election campaign. Some might even go so far as to say it cost him The Lodge. Thank goodness for that. But banking half a billion dollars in taxes from Australian companies, Australian retirees, Australian superannuation funds and Australian charities under the guise of whacking franking credits is not good policy.

Labor's ended small-business tax concessions. It has absolutely taken a big stick to the instant asset write-off provisions. I know we had them as an unlimited amount as a COVID measure, but, I tell you what, they were far better under us than they ever will be under Labor. What Labor doesn't realise is that this is enhancing and promoting, and giving small business the opportunity to buy a ute, particularly if you're a tradie, or for any other company—to write off those profit-making assets, which ends up back in the tax coffers anyway.

This taxation measure is something that the coalition believes is overdue. Labor needs to stop whacking everybody with its high taxes, but the bill is, as I say, something that very much needs to be looked at.

Peter Khalil (Wills, Australian Labor Party) Share this | Link to 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.

Anne Webster (Mallee, National Party, Shadow Assistant Minister for Regional Health) Share this | Link to this | Hansard source

This package of multinational tax avoidance measures, the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and related bills, is built on the world-class, world-first legislation that the coalition developed when we were in government, despite what the member for Wills says. For a long time, multinational companies avoided paying tax in some countries by using tax havens or favourable regimes, thereby depriving countries like Australia of much needed tax revenue. Today I will highlight some glaring examples of where multinational companies have ruined Australia businesses.

A rapidly growing share of shopping and trade now occurs through a multinational company's online platform or business. When a multinational company avoids paying their fair share of tax, Australian families and small businesses are forced to carry the burden. The coalition acted on this important initiative in 2014, when we found that existing laws were insufficient to address the cunning tax avoidance strategies multinational companies employ. During Australia's presidency of the G20 in 2014, the then coalition government introduced some of the strongest tax integrity rules in the world. The OECD's Action Plan on Base Erosion and Profit Shifting followed, and that's important, because a globally coordinated effort is required. Without it, multinational companies will shift their business or activity to tax havens or countries like the Cayman Islands.

Since 2021, more than 140 countries have signed an agreement, led by the OECD, to impose corporate tax of at least 15 per cent. The OECD estimates that, if everyone signed up, tax avoidance would reduce by 80 per cent worldwide. Identifying where companies earn their money is difficult in an increasingly online marketplace, particularly when it concerns the tech giants, whom I will focus on today.

Facebook, now called Meta, claim they pay 30 per cent corporate income tax; however, that's on what they report to be Australian revenue. Facebook paid just over $30 million tax in Australia in 2021-22, the most recently available reporting year. That's just 2.6 per cent of their Australian annual revenue of $1.15 billion in the last reporting year. They claim 91 per cent of their income was not taxable. Google earned $1.892 billion in Australian revenue but paid just $90 million in tax, an effective tax rate of 4.8 per cent. They claimed that 80 per cent of their revenue wasn't taxable. Microsoft was worse, earning $6.3 billion in revenue in Australia but claiming 93.6 per cent of its revenue was not taxable—'Nothing to see here!'—resulting in them paying just $120 million, or 1.9 per cent, effective tax on gross profits. Believe it or not, there is a worse offender: Apple, who earned $9.3 billion on Australian shores yet paid just $137.3 million in tax—which was only 1.5 per cent of their Australian revenues. Appallingly, in 2018 Netflix reportedly had an effective tax rate of 0.05 per cent in Australia despite $1 billion in revenue, paying just $342,000 in tax. That figure rose to $868,000 in 2022 but is still far short of its revenue and impact on Australian society. Netflix's tax avoidance smarts aren't limited to Australia; in the USA, during the life of the Trump administration, Netflix paid US$81 million in corporate tax despite earning $10.5 billion over that period. How do they get away with this?

Into that multinational tax avoidance mix comes this package of bills, to implement the global minimum 15 per cent tax in concert with the other 140 inclusive framework member countries as part of the two-pillar solution on multinational tax avoidance. The package has been delayed by some reluctance from the United States, from both the Obama and Trump administrations, because many of the targets of antiavoidance by multinational corporations have been some of America's biggest companies. The government estimates this package of bills will bring in just over $370 million over the five years to 2026-27.

I will focus, in this context, on the lack of social responsibility portrayed by the tech giants in our society and economy. First of all, there is a shocking level of scams through social media, Google and the internet. In my electorate of Mallee, constituents have come to me dismayed at being scammed; in fact, I've been scammed myself recently. While the government is taking some action in this area, I would like to see strong action to prevent vulnerable people from being exploited by scammers. On the weekend, Westpac accused Meta of failing to deal with the scam and fraud epidemic, raising 360 scam incidents from October to this month for Westpac customers alone. Executive Carolyn McCann urged Meta to review the way the Facebook platform is being used to scam ordinary Australians. The tech giants are also facilitating significant economic harm in our communities. Amazon, Google and Meta, through Facebook Marketplace, are becoming go-to destinations for people buying and selling new or second-hand goods. Meanwhile, local small businesses with retail leases are under huge pressure.

In the media space the tech giants have the ability to target Australians on their phones, which they look at 7.8 times an hour on average, according to Tech Daily, which equates to about four to five hours a day spent looking at their phones. Data out this week shows teens are spending two hours a day looking at TikTok, an hour and a half on Snapchat and an hour on Google-owned YouTube, while children aged 10 to 12 spend 79 minutes a day on YouTube and 122 minutes, two hours, on TikTok.

Apart from these deeply disturbing statistics, the tech giants are also killing traditional forms of advertising. Streaming services like Netflix, which I mentioned earlier, have slashed free-to-air television viewership, forcing Australian television networks to speed up the rollout of their digital television on-demand services. Advertising revenue on Australian digital on-demand services is rising but not fast enough to keep up with the lost revenue on traditional free-to-air services. Teenage television viewership has reportedly fallen from 75 minutes a day in 2011 to just 13 minutes, according to Free TV. Live streaming is now 20 per cent of all free-to-air viewing, and that percentage is rising. Many new homes do not even bother installing an aerial.

I've given this subject a lot more thought recently because on 1 July Mildura suffered the indignity of, reportedly, the first shutdown of a digital television service in Australia. Former communications minister Stephen Conroy visited Mildura back in July 2010, hailing Mildura as the first place in Australia to switch on digital television. Of course, this was a positive spin put on switching off analogue television signals. Mildura is now arguably the first to lose digital signal.

Mildura has already lost its local television journalist and does not have a local television news bulletin. We used to have a healthy local journalism market. Now, all of our television news comes out of Melbourne or, if you're lucky, Ballarat or Bendigo. I cannot speak to a local WIN Network, Seven Network or Ten Network journalist with their camera. I've had to beam in via satellite on my own device. Without local journalists, TV networks just ignore local stories. Mildura people put up with the homogenised news from other parts of a very wide disconnected region due to the death of local journalism. Local radio and newspapers are struggling as well. As non-government broadcasters, they rely on advertising revenue. They are rapidly failing due to the tech giants monstering the advertising industry.

Lest anyone is thinking it, I will briefly mention that the ABC is not the solution here. The solution to market failure is not more government controlled journalism. Rather, it is to find ways to improve competition. Media competition is dying in regional Australia and the traditional Australian media. The tax-avoiding tech giants are silencing our local voices.

The coalition led the world, again, in government when we created a news bargaining code. But, under this government, the multinational digital platforms have refused to renew the deals. These deals, estimated to be worth $200 million per annum—a fraction of what these multinationals should be paying in tax in Australia—were to fund Australian journalism.

Australian media companies face all the other rising costs of doing business but compete on an unbalanced playing field against tech giants that pay nowhere near the 25 per cent corporate income tax for businesses with turnovers under $50 million or 30 per cent for businesses with higher turnovers. The coalition lowered corporate tax rates from 30 per cent for all businesses to 25 per cent. We wanted to lower it for all businesses but settled on lower taxes for businesses with turnover under $50 million. A lower corporate tax rate encourages investment and discourages the use of tax havens. Even the Minister for Industry and Science knows that.

According to the US Tax Foundation, the average corporate tax rate around the world is lower than ours at 23.45 per cent. It's 23.73 per cent in the OECD. In Asia, the average is 19.8 per cent, the lowest regional corporate tax rate in the world. There are only 20 jurisdictions in the world with a higher corporate tax rate than Australia's for companies with over $50 million in turnover per annum. It's little wonder that tech giants look for tax havens to escape our corporate tax. Let's not forget that these tax-avoiding tech giants are also failing our children and vulnerable people in the community by failing to take appropriate action against predators, scammers, sextortionists, pornography, and violent or extremist material online.

The coalition put forward the proposal for age verification online, but this government has been very slow to move towards a trial in this area. We know, from overseas examples, that age verification works. For reasons I'm outlining in this speech, the tax-avoiding tech giants' complaints about how hard age verification is should fall on deaf ears in Australia. The tech giants are acting in a socially irresponsible way in Australia and do not pay their fair share of tax, so they can lift their game on age verification.

I'm very concerned about the growing foreign influence of the tech giants because Australians are spending so many hours of the day on these tech giants' platforms with their thoughts being directed by foreign influences, not our own. Australians are shown political content from, say, the United States in precedence to Australia. I believe our political literacy in Australia is at an all-time low. Social media algorithms give users more of what they are already looking at or talking about, thanks to the corporate surveillance of your own phone, to reinforce existing biases. At least traditional media services once showed both sides of the story, giving you a diverse, informative news bulletin at six or seven o'clock to broaden your intellectual horizon.

It gets worse. We parliamentarians are expected to spend money on these tax-avoiding tech giant platforms, promoting what we have to say to ensure our voters are seeing it. Who profits from that? It's the same multinational tech giants that are paying less than five per cent effective tax in Australia. We are rewarding their conquest of the entertainment and news market by paying them to gain even more market share.

In conclusion, this bill builds on the coalition's world leadership of acting in the Australian national interest, and I believe the current government must do more. The tax-avoiding multinationals do not have Australia's best interests at heart, and we need the federal government to stand up to them.

Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

You would think, in the context of one of the worst housing and cost-of-living crises we have seen in generations, that everyone in this country would be doing it tough. But there is one group who are actually doing very well right now, and they are coal, oil, gas and other large multinational corporations, who are driving this cost-of-living and housing crisis with their massive price gouging and huge corporate superprofits.

We know that over 30 per cent of the entire Australian economy goes to the profits of big corporations. As a result of analysis of this cost-of-living crisis, we know that, over the last few years, Australia's 500 biggest companies made $98 billion in crisis profits. That includes Woolworths and NAB, one of the big four Australian banks. So, while you're paying more at the supermarket, getting price gouged; paying massive amounts on your mortgage; and being forced into vicious financial stress, some of Australia's largest corporations are getting away with massive corporate superprofits.

Why is this happening? In large part it's because those same corporations, whether it be Santos, Chevron or NAB and the three other big banks—who happen now to be represented, by the way, by former Labor premier Anna Bligh—wield enormous power over our political system on both sides of politics, both Labor and the Liberals. We know they both take millions of dollars in donations from those same corporations who benefit from incredibly favourable tax arrangements that, for instance, in one financial year, saw three out of five coal and gas corporations operating in this country pay zero dollars in tax—none. They're exporting our coal, oil and gas overseas. That means that $100 billion in income across 54 companies saw them pay zero dollars in tax. In fact, in the 10 years between 2014 and 2024, all the teachers in the country paid twice as much tax as the entire oil and gas sector. This is despite the fact that Australia is one of the largest exporters of fossil fuels in the world. We're in the top three—in the top three.

Despite that, we're in a situation where millions of people are living in poverty in this country, where you've got single mums choosing between feeding their kids and paying the rent, and where you have families coming to free meal programs because they can't afford to feed their family every night because they have to cover their mortgage that goes to one of the big four banks that records massive corporate profits. But the banks get away with paying very little tax on that, compared to the amount of income they make, which then means the government decides not to invest in the cost-of-living relief that those people need.

We know that, even if we just taxed our fossil fuel industry at the same rate as Norway tax their oil and gas industry, we would raise hundreds of billions of dollars more in income that we could put towards real cost-of-living relief. It's worth thinking about it in these terms: every time you have to skip seeing the dentist because you can't afford to pay, that's in part because governments will not properly tax our multinational corporations—one third of them get away with paying zero dollars in tax—or tax our oil and gas industry, and that means there's not the revenue there to bring dental and mental health into Medicare. Every time you're struggling to pay your student debt and it is weighing down on you and preventing you from getting a home loan, that's because this government, and both sides of politics, have decided they'd rather have large multinational corporations and coal, oil and gas corporations paying sometimes zero dollars in tax than provide you with relief, wipe your student debt and make university free.

If you're a pensioner or on income support, every time you're forced into poverty because the cost of living goes up faster than your income support payments, and you're forced to live on poverty payments—and, if you're a renter, cop massive rent increases that you can't cover—that's because both sides of politics, Labor and the Liberals, decide that they would rather multinational corporations and the big oil and gas corporations paid very little in tax, sometimes zero dollars in tax. It has been revealed, for instance, that when the government's latest gas tax was being drafted, in the room sat some of Australia's largest coal, oil and gas executives. You don't get to see ordinary working people sit in the room with senior officials and write tax policy, but you do get to see large multinational corporations and their executives have enormous influence over our political system.

Here is the bottom line. Australia is an incredibly wealthy country, but right now an overwhelming amount of that wealth and power is concentrated in the hands of a small few. If we did properly tax our coal, oil and gas industry, if we did properly tax multinational corporations, we could bring dental and mental health into Medicare, we could scrap HECS debt and make university free again, we could bring the pension and income supports above the poverty line, and we could invest in a government builder and developer that goes and builds hundreds of thousands of good-quality homes that are sold and rented at prices people can actually afford, just like this country used to do and like countries around the world do right now.

Politics is about choices, and right now both major parties have decided to choose poverty, immiseration and suffering, in some cases, with millions in poverty. They've decided to choose that over properly taxing multinational corporations. The reality is that the only way we're going to stop this is with a people-powered movement that wields more power over the major parties than the coal, oil and gas industry does over the political systems. We know that former Labor and Liberal MPs have gone on to work for, to lobby for, the coal, oil and gas industry. We know that the former Labor Premier Anna Bligh is now the head of the Australian Banking Association. We know the power these corporations wield. The only way we're going to push back is with a movement more powerful than them so Labor and the Liberal Party realise that people are sick of being taken for granted by a political establishment that far too often chooses to leave them in poverty and immiseration over taxing big multinational corporations.

Allegra Spender (Wentworth, Independent) Share this | Link to 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.

Dan Tehan (Wannon, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

It is important that multinationals pay their fair share of tax. People and especially multinationals paying their fair share of tax means that we can deliver the services that we need. We need those services more and more, and we need government, especially the federal government, to provide the finances to the states for those services to be provided. I'll give you an example from my electorate. At the moment, we've just seen maternity services at the Camperdown Hospital cease. My hope is that they will resume as quickly as possible, but it's a classic example of this: if you're not getting the taxes you need, and if you're not then providing the services you need, then services will be withdrawn. We're seeing more and more that pressures through the cost of living and the cost of doing business come onto the budget. Especially in Victoria, we're seeing health services cut, and we cannot have health services cut, especially in my electorate and especially when it comes to maternity services like those in Camperdown. Let's hope those services can be reinstated as quickly as possible. It is so important that services are delivered, and the way you deliver services is by making sure you have equitable taxation.

As we've seen with multinationals over a period of time, there have been real concerns about whether we are getting multinationals paying their fair share of tax. That's why, when the coalition were in government, we started a process of making sure that multinationals would be taxed fairly. As the Deputy Speaker and everyone in this chamber knows, that was incredibly important work. What we're seeing from the government is a continuation of that process, including the OECD two-pillar solution to multinational tax avoidance. We obviously support that work, because we want to make sure that multinationals are paying their fair share. As I illustrated in the example before, if we're not getting everyone to pay their fair share, then pressure comes onto government to provide the services that they need.

We remember that, before the last election, the Labor Party said the only thing they would look to do with regard to raising taxes was when it came to multinationals. It's been two years since the election, and now we see them beginning to do something on this for the first time. Why it has taken them two years is beyond me, but that seems to be the glacial pace at which this government works on anything. They also said, 'That's all we are going to do when it comes to taxation.' And yet, once again, what we've seen is a failure to honour their word and commitment. Let me give you some examples of this. They said, 'Our focus will be on multinationals.' But what have they done as well as target multinationals? They've raised taxes on superannuation. 'We'll have no new taxes. We won't do anything.' But they raised taxes on superannuation. Then came a real doozy. They decided that they would tax unrealised capital gains. How that is going to work is, I think, beyond anyone. How the government could even introduce such a policy and then think it would be workable is just crazy.

I'll give the example of a farmer in my electorate. They might have seen their land value go up over the last three or four years. All of a sudden, because of what's happening with agricultural prices, that land value might have started to go down. How is this going to work when you're trying to tax unrealised capital gains? If the land value had gone up, they might have had to sell some property to pay the unrealised capital gain. Then, all of a sudden, the price goes down. How is that going to work in this wonderful system that the government is putting in place? Obviously, we're going to have to see the detail at some stage and, as we know, especially when it comes to the Prime Minister, they're not very good at detail, so who knows what is going to happen when it comes to that wonderful new area of taxation that they've put in place.

Then there are the increases on franking credits. They said they weren't going to do anything on franking credits, but then we see that, by stealth, they've introduced taxes on franking credits. Of course, they've ended the small business tax concessions, and they've decimated the instant asset write-off relied on by Australian small businesses. Here we were, with the government saying, 'No taxing. No taxing. We're only going to do it to multinationals.' Then, all of a sudden, what we have is new taxes.

Government Members:

Government members interjecting—

Dan Tehan (Wannon, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

And those opposite start arcing up. Of course, they can't arc up and say, 'No. We didn't do it.' They arc up and say, 'Oh, well, even though we said we weren't going to introduce new taxes and the fact is that we have introduced new taxes, there's nothing to see here.'

The Australian people are waking up to the government, and they're waking up in a cold sweat because all they're seeing from the government is that they're making the cost of your life in every area more expensive. They're taxing you where they can, they're adding to your cost of living where they can and they're adding to your cost of doing business where they can. It is cost, cost, cost, and there are no solutions whatsoever, especially when it comes to the cost of living. It's getting to the stage now where schools are having to feed children. It's getting to the stage now where small businesses are saying to me in my electorate, 'It's never been this bad. The Asian financial crisis and the GFC had nothing on what we're dealing with now.'

And people are waking up. They know. When it comes to wages, their real wages have gone down. When they go to the supermarket, they can buy about a quarter or a third less than they used to be able to buy. They get that realisation every single time they turn up to the supermarket. What is happening to their wages and its real capacity to purchase things is writ large for them there. I say to the government: enough with taxing; it is not what people need right now. If you can, start on the cost of living, deal with inflation, deal with the cost of doing business. That is what your key focus should be.

While we welcome the continuation of the work that we were doing in government when it comes to multinationals and making sure they pay their fair share—

A government member interjecting

I just hear an interjection and I've got to take it. Someone on the other side said, 'Oh, you've been asleep at the wheel.' We actually introduced this. You've taken two years to produce this. You haven't only been asleep at the wheel; you rolled your sleeping bag out, put some earmuffs on and went into a coma for two years.

Government members interjecting—

You've done nothing for two years. You've been in government for two years, and you've just introduced this. These are extraordinary interjections from those opposite. I would just focus on doing your job: making life easier for the Australian people and, especially, fixing the cost of living and the cost of doing business—and you don't do that with new taxes.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Hume has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment be agreed to.

Question unresolved.

As it is necessary to resolve this question to enable further questions to be considered in relation to this bill, in accordance with standing order 195 the bill will be returned to the House for further consideration.