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

I rise this morning to contribute to this debate on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Reporting of Gas Reserves) Bill 2018, which has been brought on by the One Nation party. I had the opportunity to have a look at Senator Georgiou's second reading speech in relation to this matter. Senator Georgiou in his second reading speech makes reference to countries such as Canada, the UK and the EU, who have already forced multinational companies like Chevron and Exxon to report on payments to the respective governments as well as production levels, and says that Australia would be bringing ourselves into line with such countries if we were to support this legislation. If we really wanted to be fair dinkum about transparency, we should be looking at the issue of the Extractive Industries Transparency Initiative. This particular bill before the chamber is a ham-fisted approach to deal with this issue. It deals with only a small part of the overall issue of transparency, and the One Nation party would be better advised to get on board with the Extractive Industries Transparency Initiative in the same way that Labor has. I will talk about that in more detail later.

Another pointer to the fact that this is not a fair dinkum attempt to address the issue is the fact that the bill has been developed without proper consultation with the industry. I know Senator Georgiou has a personal interest in this issue. I've followed some of his questioning in the course of estimates proceedings and I understand his concern and I understand where he's coming from on the issue of retention leases being held and no activity. But, unfortunately, this policy is not well considered, and it could well be argued that this is yet another attempt by the One Nation party to tap into an issue which has some broad community interest and support, but they've come up with a response which just doesn't do the job. Unfortunately, this doesn't stop the government from doing deals with Senator Hanson, and I will talk about that a bit later on—preference deals that have been done at election time, and deals on legislation in this house. We know that some discussions took place on the petroleum resource rent tax in relation to deals on company tax cuts, but there's been a backflip from One Nation in relation to that.

This is a government which relies on the One Nation party to force through its ideological agenda. Given the fact that we see Senator Hanson's propensity to change her mind again and again on different issues, whether you're looking at attacks on penalty rates or other issues, is it any wonder this government is relying on One Nation, and is it any wonder that this government is in disarray and chaos as we speak? I wonder if Mr Dutton will be as eager to deal with Senator Hanson when he takes over as leader of the government. What I can say is that Labor will not be doing deals with Senator Hanson at election time, and we will not support legislation that cuts out industry consultation.

The petroleum resource rent tax and other taxes that apply to the extractive industries are highly complex. It is a legitimate matter for public interest and public concern and it deserves a well-considered policy response. Unfortunately, the bill before us is nothing like that. We will not support this type of legislation, these types of stunts. Senator Hanson likes to talk the talk when it comes to cracking down on corporate tax dodgers, and she might think of this as one way to go about it, but we know that this is a stunt.

This bill reveals a fundamental misunderstanding of the way our tax system works, how revenue is collected, how the role of the National Offshore Petroleum Titles Administrator operates and how the offshore resources industry works. NOPTA, as it's called, is a titles administrator. It is not equipped to report on these types of issues. There are a range of shortcomings in the bill, which have already been dealt with by some of my colleagues. I don't want to dwell on that or duplicate many of the arguments that have been used, but I think it is worth repeating that the bill would require offshore resources companies to provide information that either doesn't exist or can't be provided, such as information about tax paid on a licence-by-licence basis. We know that we don't have information being collected on that basis. Licence fees, which the bill seeks to make public, are already published by the Commonwealth offshore titles administrator, and the bill would seek information about royalties and tax paid on revenue earned by retention leases. As has been previously indicated, a retention lease, by definition, is not a resource that's producing revenue, and in many instances it might never become economic to develop it. It's a lease that's there to retain an asset whilst doing the work to make the development stack up, so companies don't pay royalties or tax on retention leases because there's nothing to pay royalties or tax on. This, I think, is a pretty fundamental example of the nature of the bill in that it's ill considered. Once again it demonstrates a real failure to understand the role of the offshore titles administrator. It's interesting that this bill would extend NOPTA's power beyond the powers that are currently held by the ATO. The titles administrator is not the appropriate place for this function to be located; it quite clearly should be a responsibility of the ATO. They are clearly best placed to collect and report that information. But, as I've said, we do support greater transparency, and I will talk more about that later.

Whilst this government is busy tearing itself apart, the One Nation party is taking advantage of that, and Labor is getting on with the job. Unlike the One Nation party, we listen to industry. We actively consult with industry. We are on the ground, developing policies that will work, like the extractive industries disclosure regime. We support greater tax transparency not just for the extractive industry but for all industries. But we don't support a two-tiered system, and it's another shortcoming of this bill that it seeks to treat offshore companies in a different way to onshore extractive industries. That's a distinction that we don't support. We are going to crack down on corporate tax dodging across all industries, but, again, this particular bill is not the right way to go about it. Our alternative approach is the extractive industries disclosure regime. This policy includes both large oil and gas companies—as well as mining companies—and it's a much more comprehensive approach than that which is set out in this proposed legislation.

Our approach derives from the global Publish What You Pay initiative, which was launched in 2002 in the United Kingdom by civil society organisations. Many governments, including the European Union, the UK and Canada, have all enacted legislation requiring the disclosure of payments to governments by extractive industries companies. I think that, in his way, Senator Georgiou was alluding to this in his second reading speech, but, as I've indicated earlier, the approach that this One Nation bill takes is ham-fisted, and it doesn't take a holistic approach to the issue. The extractive industries payment disclosure regime aims to encourage financial transparency in the extractive industries by placing rules and regulations on oil, gas and mining.

This is a really important initiative for many of the world's poorest nations that may well happen to be endowed with minerals and resources of significant market value which are being developed by multinational corporations and governments. Despite years of mining and development in some of these very poor nations around the world, they are not benefiting as fully as they could. Senator Singh referred to Timor-Leste, Papua New Guinea and Solomon Islands. These countries have multibillion dollar resource projects that are operated by multinational companies, yet these are the nations that are continuing to fall short of Millennium Development Goals and equitable economic growth.

It should also be said that this lack of transparency has the other effect of sheltering corruption. What we are trying to see is a situation where countries receive a fair return for their commodities so they can build the infrastructure and institutions that they need to support sustainable economic growth.

This is not the first foray that Labor have made into this area of tax transparency. We have also announced our tax haven transparency package and multinational tax avoidance measures, which we've indicated are going to improve our budget bottom line by $5.4 billion over the decade by ensuring big corporates no longer get a free pass to sail through the LNP government's tax loopholes. Those are the sorts of things which this particular bill says that it's trying to address and purports to address, but, unfortunately, it falls well short of doing anything meaningful about them.

Labor have always been very clear about our plans to crack down on corporate tax dodgers. In contrast to the government's inertia and inaction, as well as One Nation's misguided attempts to increase company tax and royalty transparency and to crack down on multinational tax avoidance, we on our side have a strong suite of policy alternatives. As chair of the Senate Economics References Committee, I am proud of the work that we've done on this particular issue. Across the life of our Senate inquiry into corporate tax avoidance, we held 12 public hearings and received 167 submissions. So, on this issue, we have a strong history, both in government and in opposition.

The Economics References Committee's work on corporate tax avoidance, including an assessment of the PRRT, provides a much better and more comprehensive policy response than what both the government and One Nation have provided. The Senate committee report, which was issued in May of this year, contains a whole suite of recommendations, going to things such as making country-by-country reporting more publicly available and free of charge, and converting our existing voluntary tax transparency code to a mandatory code for all large and medium corporations operating in Australia, including subsidiaries of multinational corporations. We called on the government to finalise and release its response to the Callaghan report into the review of the petroleum resources rent tax, and we noted that that response is yet to be provided.

I want to talk further about the committee's report. In particular, I want to dwell on recommendation 3. The committee recommended that all companies with a total income equal to or exceeding $100 million for an income year be required to release tax information of the level specified in the Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015. Let's not forget that coalition senators came out in support of this recommendation, which is in sharp contrast to the events of 2015 where the coalition disgracefully raised the threshold for private companies to $200 million, taking two-thirds of private firms out of the disclosure process. Labor voted against this measure—a vote that the coalition untruthfully misrepresent as opposing the multinational anti-avoidance law, which is not correct. This dodgy deal took two-thirds of private companies out of the spotlight and back into the darkness.

Recommendation 4 of the Senate inquiry report talked about having a public register of ultimate beneficial ownership that includes companies, trusts and other corporate structures. This is an important initiative to increase transparency and visibility in the sector. Recommendation 5 was that the government require all companies, trusts and other financial entities with income above a certain amount to lodge general purpose financial statements with the Australian Securities and Investments Commission. All too often we're seeing special purpose reports being issued, which may well be within the law, but it certainly hinders the level of visibility and accountability of these companies.

I've talked about the country-by-country reporting. But, on the issue of loopholes, we have policies which go to thin capitalisation which are set out in recommendation 1 of that report. We recommend that those thin capitalisation rules be amended so that the worldwide gearing ratio is the only method by which interest-related deductions should be calculated for the purpose of tax treatment in Australia.

On the issue of transfer pricing—this is another really important area for public scrutiny—our committee recommended that the government undertake an independent review into the detriment to Australian tax revenue that arises from the current tax transfer pricing regime and explore options to modify the rules to ensure multinational enterprises make the appropriate contribution to Australian tax revenue.

We also inquired into the effectiveness of the PRRT, as I've mentioned, and we had companies like Chevron, ExxonMobil and others appear before the committee. While we're talking about those particular companies—and I know that Senator Georgiou has raised those two companies as examples—there are a range of issues that we should be looking at. Arising out of our Senate hearing in Melbourne, back in March of this year, we know that ExxonMobil has said it will not pay corporate tax in Australia until 2021. That might be the state of the law at the moment, but it certainly is an issue that the average person in the street finds very difficult to understand. It's very hard to defend a multinational company that is making a lot of revenue in this country but not contributing to the Commonwealth coffers so that we can pay for the hospitals and provide the services to ordinary Australians that are required.

At the same time, we know that within ExxonMobil we have harsh labour practices going on. I took the opportunity to visit the Longford site, where there is a long-running dispute. The workers there were put onto a substandard agreement that cut their pay by 30 per cent, reduced allowances, reduced annual leave and significantly cut loadings. Workers there are refusing to accept the 30 per cent pay cut. These are the sorts of practices that are going on. There's a need to change the rules in this regard, and these companies should be held to account.

In conclusion, it is clear this week that the government is in absolute chaos. I urge the senators left in the One Nation party to have a good look at our policy. (Time expired)