Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

We have an opportunity in parliament this afternoon during this matter of public importance debate to debate a $1 trillion scandal around the world. What did the taxpayer get from Senator Macdonald in the last 10 minutes? Verbal vomit and tripe. This issue is not going to be swept under the carpet, through you, Chair, to Senator Macdonald. Australia has to take on corporate tax avoidance. We have to do it with the rest of the world. It has been reported that, globally, more than $20 trillion in tax is avoided and put into tax havens. Tax avoidance in Australia has been outlined in a comprehensive report that was referred to by Senator Milne in question time today, compiled by the Tax Justice Network. This network, working in collaboration with a large number of stakeholders, has looked at Australia's specific circumstances and it has come up with a figure of at least $8.4 billion in lost tax through multinationals each year.

We have tax avoidance problems with individuals, which the tax department is tackling through an amnesty. On the same hand, we have cuts to the tax department—savage cuts to staff, savage cuts to resources. When we know that $1 invested in forensic work to chase tax cheats is going to pay a good dividend to the Australian voter, to Australian citizens, we are cutting resources to the tax department. Let us hope the amnesty works. I will certainly look forward to asking more questions about that at upcoming Senate estimates—as will other senators.

What I am really interested in is this question of tax avoided in Australia. We have an estimate from a study here today, but what is the government's—Treasury's—own estimate of tax avoided in this country in recent years? Are we confident that we are tackling this problem properly? Can we confidently say in forward estimates that we are going to bring in billions of dollars of revenue—billions of dollars that are desperately needed to pay the bills?

It was interesting listening to Senator Macdonald, because he obviously has no understanding at all of the history of this country. Since Federation, this country has run current account deficits. Anyone who understands economics would know that current accounts include government spending. Current account deficits mean that we always borrow, in the private sector and in the government sector. We have always borrowed from overseas, since Federation.

I do not hear anyone talking about the interest on the borrowings that we have, and have always had, in the private sector. All we hear is this same mantra of the daily interest rate bill. If that money is being spent productively—being invested into our communities, our schools, our social welfare systems and the networks that help people get up and running when they need that help—then that is a good, productive investment in our country. And it will be paid back.

We get a very limited level of economic debate from that side of the chamber because that is what suits their propaganda. I will be very interested to know what the government is forecasting in terms of revenue from stronger action on tax minimisation. What is this tax minimisation? At a corporate level it is often referred to as 'profit shifting' or 'base erosion' and 'transfer pricing'. Essentially they are pretty similar concepts. It is when multinational corporations plan or put in place a planning process to allocate costs and revenues to different locations to reduce their tax liability.

As outlined in the report Who pays for our commonwealth? tackling corporate tax avoidance is an urgent priority. We see very high gearing ratios amongst the ASX 200, which means that they have high debt levels; and there are issues with interest repayments, which are tax deductible; and it is a good way of avoiding tax. I will get to the point in a minute that, unfortunately, these things are legal. There are loopholes in tax systems all around the world because we do not have harmonisation between countries that have the same tax systems. This allows multinational corporations to exploit different tax rules in different countries and get away with it. So, apart from the fact that we have to take a much stronger stance and crack down on tax avoidance or tax dodging, we also need to look at how we change the rules, both here and globally, to tighten up what is essentially an unfair avoidance of tax by multinationals.

Here are a couple of conclusions from the report that I referred to earlier. Within the ASX 200 companies, nearly one-third have an average effective tax rate of 10 per cent or less; 57 per cent disclose subsidiaries in secret jurisdictions, which are also commonly referred to as tax havens; and 60 per cent report debt-to-equity levels, as I mentioned—high, but in this case over 75 per cent, which artificially reduce taxable profits.

We recently raised this issue at the G20; our Treasurer raised this issue. It has been around for years; tax dodging by multinational corporations has been discussed in parliament and in media circles for decades. Now we are finally getting around to being part of a global cooperative effort to do something about it. But if you read the media there is a lot of cynicism that anything is going to get done.

Information sharing is great—it is a good start—but there is a lot more that could be done to avoid tax-dodging and tax minimisation, which essentially is a legal way that multinationals avoid paying tax in their country. But we all agree on one thing. The communique released after the G20 meeting in Cairns last week said: 'Profits should be taxed where economic activities deriving the profits are performed and where value is created.'