Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

Thank you very much, Mr Acting Deputy President. I am very pleased to make a contribution in respect of this MPI relating to the failure of this government to address multinational tax integrity whilst attacking the living standards of pensioners, students and young job seekers. Of course, the premise of the MPI is the fact that we have a government based on broken promises and twisted priorities. There is nothing more evident in that in relation to this propensity of the government to attack the living standards of pensioners, students and young job seekers whilst, at the same time, leaving the big end of town alone and with various tax arrangements which need to be looked at.

We have a government that last year claimed that there was a budget emergency. You would think that a government that really believed that would do everything in its power to improve its revenue streams, but of course what we see is, in fact, the attacks on pensioners, the unemployed and students. We know that the government has moved away from that rhetoric of a budget emergency. I note that recently in New Zealand the Treasurer admitted that there was, in fact, nothing wrong with the Australian economy. As everybody here knows, Australia has a relatively low international debt and the growth rate of the Australian economy is amongst some of the best in the world. It is perverse that we have a Treasurer who uses the terminology of 'lifters' and 'leaners'. What the government is doing in this regard—or, more precisely, what they are not doing—is they are giving the leaners a head start by going too slow on tax reform. A 2013 paper by the Treasury titled 'Implications of the modern global economy for the taxation of multinational enterprises' states:

As chair of the G20 in 2014, Australia can have a prominent role in determining and driving this reform agenda.

As chair of the G20, Australia should be leading from the front, and it is time for Mr Hockey to step up to the plate. Empty talk will not cut it for tackling multinational tax. There is a significant gap between this government's rhetoric and its actions when it comes to ensuring that multinationals pay their fair share of tax within Australia. I draw the attention of the Senate to the fact that the previous Labor government did make an attempt to address this particular issue. I refer to the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013. When given the opportunity, the members of the coalition did not support this attempt by the previous Labor government to address this issue.

It simply is not fair that major Australian companies operating internationally can shirk their tax responsibilities. Companies that earn profits in Australia must pay tax in Australia. I think people on all sides in this place would accept that basic principle. Multinational tax avoidance leaves small businesses and everyday Australians to pick up the slack of paying for government services. Major companies benefit from Australia's highly educated workforce, our extensive road, rail and port infrastructure, our secure energy supply and our willingness to attract investment. It is reasonable that those companies should also make a fair contribution to the tax base, which funds those things. Unfair tax arrangements advantage large multinational companies over domestic Australian companies. This is unproductive, inefficient and unfair.

Labor has a proud record of reducing multinational tax avoidance. When in office, Labor introduced key reforms that would have prevented $5 billion in revenue from being moved offshore. Unfortunately, the government is not fully implementing these measures and this is costing the budget over $1.1 billion. I, again, refer to the bill from 2013 that I mentioned previously, and when addressing that bill, the current Treasurer said:

We really must start this debate by asking whether these amendments are required at all.

He went on to call measures in the bill:

… an unnecessary overreaction. More red tape for business …

In addition, I note the contribution by Senator Cormann in relation to that same bill. He said:

… we do not support Labor Party knee-jerk overreactions in the face of yet another desperate attempt to raid more cash to feed its spending addiction …

Senator Cormann went on to attack the ATO on behalf of big business. In extraordinary comments, he said:

There can be a large disconnect between the way business is properly conducted and the way the government, in particular the Australian Taxation Office, would require business to be conducted—because, quite frankly, the Treasury and the tax office invariably do not understand how business actually legitimately operates.

I wonder if the finance minister still has the view that Treasury and the ATO do not understand how business operates—that is an extraordinary statement.

I note a recent report released by the Tax Justice Network found that, overall, the effective tax rate of ASX 200 companies over the last decade was 23 per cent. If these companies had paid at the statutory rate of 30 per cent, this would have produced an additional $8.4 billion in corporate tax annually. Despite this, the Treasurer has been all bluff and bluster on cracking down on multinational tax avoidance. He boasts that by committing to a 2017 start date for the common reporting standard on banking information, Australia is moving towards better financial transparency. What he did not say was that his proposed timetable lags behind the early adopter group of nations like the United Kingdom, Argentina, France, Germany, India, Italy and Mexico. Despite his bold rhetoric, the Treasurer's timetable puts Australia behind over 40 other countries. The Treasurer is all talk and no action.

These are not fringe issues. As The Age reported on 6 September this year:

There is stark evidence that Australia's corporate tax base is being eroded, with the burden of revenue falling increasingly heavily on individuals. The proportion of income tax collected from business in Australia has shrunk over the past five years, falling from 23 per cent in 2007-08 to 19 per cent in 2012-13 according to the Australian Bureau of Statistics. At the same time, the proportion of income tax collected from individuals rose from 37 per cent to 39 per cent.

But it is not only our own tax revenues which benefit from a more transparent and fair tax system. As the Micah Challenge state in their submission to the earlier mentioned Treasury inquiry:

Australia's stance on tax law, policy and international arrangements around tax also have a clear connection to the capacity of governments in developing countries to secure sufficient and sustainable sources of financing for development. Pressing for reform on the international tax system also has the potential to build and strengthen norms of transparency and accountability among and between governments, citizens and business- particularly multinational enterprises.

In March this year, the tax office announced it was investigating 86 major international firms for allegedly shifting profits offshore. It is estimated the combined cost of these schemes is more than a billion dollars a year in lost tax revenue. The government is in need of doing something about this issue. Hollow rhetoric will not suffice. The government is making up for its inaction through cuts to essential services and programs that support the most disadvantaged in our country. And the budget also shows the government would prefer to take revenue— (Time expired)