Katy Gallagher (ACT, Australian Labor Party, Shadow Minister for Finance) Share this | Hansard source

Thank you for the opportunity to speak on the Treasury Laws Amendment (Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2019. The bill contains two measures relating to multinational tax as well as a minor tax measure relating to luxury car tax. From the outset, as my colleagues in the other place have pointed out, Labor will support this bill. However, we think the government could go further and adopt measures which could provide much-needed revenue to help boost an economy that is floundering on this government's watch.

Schedule 1 of the bill deals with Australia's thin capitalisation rules. Under the rules, an entity must comply with accounting standards in determining and calculating the value of assets, liabilities and equity capital. Currently an entity can depart from this value to use figures that are not in the entity's financial statements or recognise certain assets not recognised by accounting standards and revalue intangible assets without an active market. The amendments in schedule 1 would mean that entities would have to use figures in the financial statements and could not revalue assets for thin capitalisation purposes. The amendments in this schedule would also mean that non-ADI foreign controlled Australian consolidated groups having foreign investments or operations would be treated as both outward and inward investing entities. This means that certain companies won't be able to benefit from thin capitalisation rules that they shouldn't be benefiting from. The explanatory memorandum to the bill states that this measure will raise $240 million over two years from 2020 to 2021. These amendments are all fine, and Labor will support them.

Schedule 2 of this bill requires offshore suppliers of rights or options to use commercial accommodation in Australia to include these suppliers in working out their GST turnover. These amendments recognise the reality that many people—Australians and overseas consumers—are booking accommodation in Australia online and using online service providers that are based overseas. The changes in this schedule mean that the playing field is levelled in relation to GST treatment, regardless of whether someone books accommodation directly or through an offshore provider. The explanatory memorandum to the bill says that this measure will raise $15 million in GST revenue over the forward estimates, and Labor will support this measure.

Schedule 3 of this bill is a minor taxation measure that deals with the removal of liability for the luxury car tax from cars that are reimported following service, repair or refurbishment overseas. Luxury car tax is currently applicable to taxable importations of luxury cars, not only to the initial purchase but to reimportation as well—that is, where the car re-enters Australia after being serviced, repaired or refurbished overseas. This schedule would mean that the same taxation treatment would apply regardless of where the car is serviced, repaired or refurbished. The explanatory memorandum to the bill states that this measure would have a negligible cost to revenue over the forward estimates, and Labor has no issue with this measure.

Multinational tax avoidance is a serious issue. It places serious pressure on a revenue base that is increasingly coming under strain from several sources, including from issues associated with the ageing population. Closing down tax loopholes means that more taxpayer money stays in Australia to fund critical services, such as hospitals and schools, and productivity-enhancing investments. It's also fair to say that the state of the economy, which is floundering on this government's watch, requires actions by government that will need to be funded from somewhere. Last week we saw the release of the national accounts for the 2019 June quarter, and it didn't make for great reading. The accounts revealed the lowest level of economic growth in Australia since the GFC—a level of economic growth lower than the Reserve Bank had forecast and than the government had forecast in their budget. The national accounts showed GDP per capita going backwards over the year, productivity going backwards over the year, household spending remaining weak and total private business investment going backwards. And what did we get from the government? We got nothing serious, no economic plan to turn things around. We got a fair bit of finger-pointing, blame-shifting and excuse-making—a Treasurer in his press conference last week even gloating over these figures, simply because they may have been better than some people were forecasting and better than even-worse numbers, which just sounds ridiculous.

We know that the government's heart isn't quite into all this. For example, they like to cite revenues raised by the Tax Avoidance Taskforce but never admit that most of those revenues are based on Labor's transfer pricing laws that they opposed in 2013. It was Labor's laws that the Liberals opposed that underpinned the tax office's $300 million win against Chevron. It was Labor's laws that the Liberals opposed that delivered the tax office's $529 million settlement with BHP. And let's not let the record stand uncorrected when the government continues to peddle the mistruth that Labor voted against the multinational anti-avoidance law. It's a tired old rewriting of history that government all too predictably likes to repeat.

You need only look at what Labor put forward at the last election in relation to multinational tax avoidance to judge what our position is. As the shadow Treasurer pointed out in the other place, we had 19 measures to crack down on loopholes and tax havens. These included tightening debt reductions, closing public reporting loopholes, increasing capacity for the ATO, public reporting of AUSTRAC data, and whistleblower protections. These were serious measures aimed at multinational tax avoidance. The government could take up any of these. If they put them forward, we would support them. A serious agenda to tackle multinational tax avoidance would ensure that we had the revenue to deal with future budget pressures and measures to rescue an economy that's floundering under the watch of this government.

To conclude, Labor will support this bill, as we have done with all sensible measures to deal with multinational tax avoidance. However, we know that the government can do more in this area and we urge them to do so. If they took it seriously, we might be able to generate the revenue required to deal with some of the future budgetary pressures as well as an economy that is struggling on their watch.