Jenny McAllister (NSW, Australian Labor Party) Share this | Hansard source

This government said that it was too busy dealing with other legislative priorities to bring forward a vote on same-sex marriage. It is interesting to contemplate then why it is prepared to dedicate time in this chamber and the other place to unwinding a popular piece of legislation that lets Australians see how much tax business is paying. The answer is hidden in the explanatory memorandum to this bill, the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015, and it pays to review the reasons that are set out there. Reason No. 1 is that it 'ensures that the public disclosure of information by the Commissioner of Taxation under the income tax transparency laws does not affect the privacy and personal security of the ultimate owners of Australian-owned private companies'. Let's turn to privacy. This is clearly not a genuine reason for this to be pursued in this way. Information about the value abut these companies—companies worth more than $100 million—is publicly available on databases like IBIS. I heard Senator Edwards remark that the BRW Rich List might be the source of Labor's information on this. I have never read that but I can tell you that IBIS routinely publishes very detailed information about the affairs of companies and individuals associated with them, and the value of their assets. It is also willingly disclosed by many of these people to BRW, although Senator Edwards clearly sees this as a complete waste of reader's time.

Personal security is also referred to in this reason and, as we learned in the legislative hearings for this bill, there has been absolutely no advice provided by the AFP that kidnapping is a risk in relation to the publication of this tax information. There has not been to my knowledge a spate of kidnappings exposed in the newspapers—I have not read anything about that. In any event, wannabe kidnappers do not need to review information that is provided by the Commissioner of Taxation and traced through the beneficial ownership back to particular individuals to work out who is wealthy and who is not. We have a growing gap in this country between the haves and the have-nots. It is fairly obvious who is wealthy and who is not.

Reason No. 2 in the explanatory memorandum says that it 'removes the risk that such disclosure of the information will harm Australian owned private companies' market environments'. This argument about competition is not a genuine reason to proceed with the measures in this bill. This bill in fact levels the playing field between the publicly listed companies whose financial reporting gives a much clearer picture of the risks related to those companies and the private companies whose lack of reporting may conceal the true risks associated with that company.

Reason No. 3:

These amendments will reduce the compliance costs imposed on Australian-owned private companies.

Again, really, compliance costs are a genuine reason? We cannot be serious about this. Compliance costs are always a question of proportionality and balance. If there are costs associated with this and there is a public good, then reasonable compliance costs should be borne by the business.

But, finally, in reason No. 4, we come to the real reason that this bill is being brought forward:

The amendments will reduce the need for such private companies to correct probable misinterpretation of the information and to manage reputational risk.

This really lays it bare, doesn't it? There are some companies out there, not all by any means, that are paying an amount of tax that the community, if it knew about it, would think was unfair. The disclosure of that, quite probably, as outlined in the memorandum would lead to reputational risk—more properly described perhaps as complete outrage about the situation that sees some of these companies contribute very, very little to our national outcomes.

The explanatory memorandum acknowledges that misinterpretation is not only possible but probable. What is really happening here is that people who are determined to conceal some outrageous propositions have leaned on the Liberal Party to do their work in this place. Because the truth is that, although most companies—and it is most companies—try to pay their fair share of tax, there are some companies that take aggressive steps to minimise the amount of tax that they pay in Australia. There are some companies that are in legally grey areas, so the ATO has publicly stated that privately owned corporate groups, often controlled by a wealthy individual or family, pose tax compliance risks. These are the very companies that this government is trying to exempt from scrutiny.

We know that the ATO is negotiating with some large multinational companies to unwind dubious tax structures that have seen hundreds of millions of dollars expatriated in questionable circumstances. The Senate committee has reported on the dangers posed by base erosion of profit shifting—multinational companies taking advantage of their global organisational structure in order to shift profits from where they were actually earned into low-tax jurisdictions. There is no doubt that some of these tax structures are strictly illegal; however, they produce outcomes that most Australians would not think fair.

I want to recognise the very important work that has been done by the Tax Justice Network in highlighting the tax practices of Australian and multinational corporates. They gave evidence to the legislative committee, which indicated that nearly one-third of ASX listed companies have an average effective tax rate of less than 10 per cent; and 26 per cent of Australian headquartered companies with over $100 million in income paid no tax. Private companies linked to Australian high-wealth individuals have average profit margins lower than other categories of companies. Almost two-thirds have some form of international related party dealings—and these companies amount for most of the international party dealings reported to the ATO, despite being only 21 per cent of the business caught under the relevant provisions of the legislation. Not all of these companies are going to be in breach of the law and not all of these companies are going to be engaged in aggressive tax minimisation. But there are signs that there is a problem that would benefit enormously from the scrutiny under daylight.

The Institute of Public Affairs submitted to the Senate inquiry that there is nothing wrong with an individual or company structuring their affairs to pay the minimum legal amount of tax—I beg to differ. If that were actually true, then there would not be any reputational risk from the public finding out how little tax some companies pay. The truth is that most companies are interested in being good corporate citizens, and part of that involves paying a fair share of tax. This is because tax supports the systems that those companies need to continue to do their business and generate profits.

The tax raised pays for schools and universities that educate the workers that these businesses need. It pays for blue-sky research that produces innovation that products build on—things like the CSIRO's invention of wi-fi. It pays for the security and safety that allows customers to feel safe buying and using high-end electronic products like the phones most us carry around—secure that it is not going to be nicked by a violent offender, because we have got very good law and justice systems in this country. It pays for welfare protections that give workers some comfort—to be able to take on the flexible working conditions that many of these companies demand—in the knowledge that is if there is a difficult adjustment between jobs, then there is some sort of support system that those workers can fall back on. These are all critical elements of running a successful business in this country and it is why this country remains a place where business wants to invest. The companies who are employing aggressive tax minimisation strategies know that this is true. They know that these are things that are valued by the public and they know that they would face significant public pressure to pay more tax if the amount that they were paying was made public.

It misses the point to say that these strategies are legal. There are plenty of things that are legal that are not right. It is legal to walk past someone who has fallen down and hurt themselves, but the fact that it is legal does not make it right. If you do something like that you cannot complain if the people around you rightly call you out on your actions. That is what the measures introduced by Labor, to provide for some level of tax transparency for large companies, do. They let Australians call out the behaviour of companies who have chosen to walk past rather than help out.

We have heard that Australia has a budget crisis repeated a lot in the last few years. This government has suggested that everyone is going to need to make sacrifices in order to return to surplus, although in the measures that were introduced in successive budgets it become very clear that when they said 'everyone' they really just meant 'working-class and middle-class families'. Australians, in this context, have a right to know—if we can borrow the former Treasurer's words—whether companies are lifting or leaning. The companies out there that are doing the right thing, who are paying the right amount of tax, have a right to know whether their competitors are lifting or leaning. ACOSS has calculated that $1 billion a year in revenue would be gained if the use of private companies to avoid income tax was curbed.

There is a significant public interest in our current budgetary context in making this information available and in putting it in the public domain. The government has said that it is worried that if information is disclosed it will be misinterpreted. We know that this is not true. The government is not worried that the Australian people will not understand; they are worried that the Australian people will understand. They are worried that the Australian people will understand all too well and that they will demand explanations. If people and companies want to use contrived structures to minimise their tax to avoid tax, then they should be prepared to defend their decisions.

As Australians, we have high expectations about the services that we can receive from government. My colleague Senator O'Neill talked about those. People expect high standards of health, people expect a decent education, people expect to be looked after in retirement as a reward for many years of hard work and service in the community, and people expect to be able to access justice when they need it. Australians also understand that if we want these services we need to take responsibility for raising the revenue to pay for them. We need to have a national conversation about how best to do this, but the precondition for any such conversation is a belief that everyone is contributing. There would be nothing more corrosive to this conversation than the perception that things are not fair. Unfortunately, there is a widespread perception at the moment that the system, as it currently operates, is not fair. Not just the tax system, but the entire system by which decisions are made and by which we order our affairs.

Debate interrupted.