Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Hansard source

Labor will be supporting the International Tax Agreements Amendment Bill 2014. The bill amends the International Tax Agreements Act 1953 to give the force of law in Australia to the Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, and its protocol—the Swiss Convention—which was signed in Sydney on 30 July 2013. Once in force, the Swiss Convention will replace the Agreement between Australia and Switzerland for the Avoidance of Double Taxation with Respect to Taxes on Income, and protocol—the existing Swiss Agreement—which entered into force on 13 February 1981.

Labor welcomes the government's implementation of legislation to give effect to the revised Australia-Swiss tax treaty, which was signed on 30 July 2013. The revised treaty was the result of hard work by the previous Labor government. The revised Australian-Swiss tax treaty will enhance the already strong economic relationship between Australia and Switzerland by aligning the bilateral tax arrangements more closely with current Australian and international tax treaty policy settings. The revised treaty will also strengthen administrative assistance between Australian and Swiss revenue authorities, in particular by permitting them to exchange taxpayer information, including information held by banks and other financial institutions, in order to address tax evasion. This reflects the commitment of both governments to a fair tax system and is consistent with ongoing international efforts, including within the G20, to improve tax system integrity globally.

The revised treaty will enter into force after both countries have completed their respective domestic requirements. We welcome the government's move to give effect to this treaty through this legislation. However, the opposition is still concerned with the government's inaction on multinational tax avoidance through profit-shifting and transfer-pricing. This government has shown a significant gap between its rhetoric and its actions when it comes to ensuring that multinationals pay their fair share of tax within Australia. Since coming to government, the coalition has provided over $1 billion in tax breaks to multinational firms. It is a simple equation: every dollar that is avoided by multinational companies must be paid for by Australian taxpayers and businesses, or by cutting services. We have seen with this budget which side the government is on. It is the side of the billionaires and certainly not the battlers.

Cracking down on multinational profit-shifting is not just about making sure that firms pay their fair share of tax. It is also about making sure that the tax burden is fairly shared across companies. For an Australian company without subsidiaries in offshore tax havens, it is hard to compete against a multinational that is able to get away with paying a lower share of tax. Unfair tax arrangements also distort investment decisions by creating an incentive to invest overseas and put local companies at a disadvantage against international conglomerates.

The Prime Minister used his speech in Davos on the government's G20 agenda to argue:

… the G20 will continue to tackle businesses artificially generating profits to chase tax opportunities …

However, the only action the government has taken on multinational tax integrity is to dump Labor's thin capitalisation reforms and transparency measures.

Alongside repealing important measures to limit multinational tax avoidance, the government wants to repeal Labor's tax transparency reforms. These reforms would have ensured the public could see how much tax Australia's largest companies are paying. As United States Supreme Court justice Louis Brandeis famously wrote, 'Sunlight is said to be the best of disinfectants.' If a company is paying its fair share of tax then it has nothing to hide when it comes to its tax affairs.

If the government is serious about making sure companies pay their fair share of tax, why are they trying to let these same companies hide how much tax they are paying? Just as publicly available food inspector reports lead to cleaner restaurant kitchens, so too a little publicity about tax paid is likely to serve the public. The fact is that the government is not serious about making sure that multinational companies pay their fair share of tax. The budget shows that the government would prefer to take revenue from Australia's least wealthy citizens rather than from some of the world's wealthiest companies. Labor supports this legislation and looks forward to the government reversing its course to take greater action on multinational tax avoidance.