Deborah O'Neill (NSW, Australian Labor Party) Share this | Hansard source

I will make a contribution which goes to the part of the Treasury Laws Amendment (2021 Measures No. 2) Bill 2021 that seeks to deal with offshore banking units. Before I do that, I want to respond to some of the statements from Senator Scarr, who I know takes his work in this place very seriously. As he's part of the committee that looks at legislation with great care, I always listen carefully to what he has to say. But I also listen carefully to people who go out into our community and act with charity, whether that's an expression of a particular faith's perspective, an expression of a particular philosophical perspective about the world and our place in it, or the Islamic call to give 10 per cent to care for others. We've got that going on all over the country right now. The people who are upset with the government for what it's proposing to do include none other than Anglicare Australia. Many St Vincent de Paul members have a few things to say about the government pulling a swiftie here. So we should be very careful to look at what the government is actually attempting with this piece of legislation.

I think we should be particularly mindful because of the warning—it's like a great neon sign that we should be looking at very carefully—that comes from Mr Gary Johns. He's the hand-picked guy that this government decided to put in charge of the ACNC as the commissioner. He's been no pushover, as I understand it. I didn't haven't any encounters with him, but I understand he's quite a serious and ruthless operator in his own way. But what he said about this is that there is no charity that has had its registration withdrawn due to activity of the kind that this government is purporting needs correction. So there are alarm bells and neon signs. We need to be careful about what's embedded in this piece of legislation, and I hope that we might get to the bottom of that as we move into the consideration in detail phase of this bill.

There is an important part of this bill that I rise to discuss today, and that is what's happening with the tax treatment of offshore banking units. I particularly want to speak to reforms on offshore banking units and laud the work that's done to remove tax breaks for offshore financial institutions. In this time of national debt that Australia has never before seen, and a great need to build up domestic capabilities, we should be closing these wasteful tax loopholes. The tax concession was initially started as an incentive to attract and maintain highly global financial sector activity. In particular, it was seeking to draw Hong Kong and Singapore. However, over the years, with so much change in the financial market, what's happened is that this has actually become a loophole that has preferenced harmful financial activities due to its low tax rate of 10 per cent and an interest withholding tax exemption on interest payments made by offshore banking units on eligible offshore borrowings.

It sounds like a great mouthful, and if you don't have much to do with offshore banking units it's a little bit unintelligible, but it's not good. In 2018 the OECD Forum on Harmful Tax Practices blasted this current regime and what it was doing, because it had the effect of attracting offshore businesses to Australia and it then provided them with ring-fencing to avoid Australian transactions from its scope. That's not good. That doesn't make us good international citizens.

So we've come to this reform three years later. This bill will ensure that offshore banking units will not receive any special taxation arrangements and will be subject to the applicable corporate tax rate that Australian financial institutions pay. While the OBU regime has effectively been closed since 2018, this bill will forever bury this tax giveaway and end all of the grandfathering of the scheme by 2024-25. So, effectively, this part of the bill I'm discussing is a correction and a long overdue reform that I wholly support.

However, as is the style and practice of this government, this is a reform that's coming too late and in a piecemeal fashion. What we've seen over eight years of government, with a failure to act on such a loophole as this, is that Australians are missing out on millions of dollars of tax revenue that slipped through these loopholes for overseas banking units. That has been going on year after year after year after year—count up eight and it ends up being an awful lot of money.

Labor has been working very hard to draw attention to this reality. We are very proud of the tireless work we've done in the financial sector space to constantly stand up to the financial services sector and for good practice in the financial services sector. It was Labor that pushed for the Hayne royal commission. People in this chamber stand up and make all sorts of claims along the lines of a former senator who said he was here to 'keep the bastards honest'. And this has been the official position of the opposition, which has constantly fought the government to protect Australian consumers and not let the reckless pursuit of private wealth for a few crush the dreams of everyday Australians.

Labor pushed the multinationals and the government for years and years to tighten rules around this multinational tax avoidance and to get these companies to just pay their fair share. There's nothing wrong with asking multinational companies to have the same standards as Australian companies and pay their tax. Labor pushed the government to support the royal commission into banks. But the government voted against that 27 times. And because they did that, because they perpetuated for so long a system that was replete with the widespread rorting of Australian customers, we really had to push to prompt an ethical reshaping of Australia's entire financial sector. Labor pushed for that inquiry into the auditing sector, which promoted a complete rethink of how Australian companies are audited. The inquiry looked at the conflicts of interest in auditing between the work of consultants and the work of auditors from the big four professional services firms. That was a great piece of work undertaken by the Joint Committee on Corporations and Financial Services. The report was really a road map for this government to take action. But, as this government does so often, the work got done, the government was given the plan and then the government forgot to show up for work. They don't get on with the job of doing the things that need to be done to make life better and safer for people in Australia.

The Australian people look to Labor to stand up for social justice and equity, certainly in the workplace but also in the marketplace. A healthy and functioning business environment is vital to the creation of jobs and the opportunities that those jobs give all Australians to grow and fulfil their potential. We, as the Labor Party, understand how vital people's retirement is. In the absence of dignity in retirement for too many Australians we created superannuation for Australian workers. Right now we are firmly invested in an ethical financial sector to ensure that the retirement incomes of millions of Australians are managed in an ethical and efficient way that benefits them, their families, their lives and their communities. We could all benefit from ethical practice in the financial sector, rather than a few benefiting with impunity. I support our financial services sector to continue to be a world leader and grow in its role as a financial services centre for the Asia-Pacific region. As fintech providers keep innovating and digital wallets become more commonplace than leather ones, I think that regulation needs to keep pace to ensure Australian consumers are protected. It's a solemn role of this government to safeguard their interests, and I'll always fight to ensure consumers are heard.

In a recent inquiry conducted by the corporations and financial services committee—and I see Senator Hume nodding—we looked into what was happening in the digital wallet space. I have to say it was quite concerning to find out that 80 per cent of the transactions in the country occur on Apple phones and that 20 per cent happen on android phones. That is because the profile of people who own these Apple phones tend to be people who have a bit more money. With these older phones, we put our thumb on the icon and point them generally at the reader. There's a little chip in the corner, the digital message goes across and all of a sudden your money is transferring. The government need to be paying attention to what's going on there because in the infrastructure between where you put the chip on that little reader and the person who sells you a good or product gets the money is completely outside any regulation in this country. The ACCC don't know what to do with it; it's just a mess. There's nobody carefully watching what's going on. Because of COVID-19 we've had a massive increase in the number of people using digital technology to pay for things. Just a couple of years ago about 24 per cent of transactions were using that technology, and it's going to be over 51 per cent by the time we get to the end of the year. In jurisdictions that are pretty similar to us, they are up to about 80 per cent of transactions using digital technology, so it's important that our government is on to this stuff.

I know that there was a review in October last year that was heralded: 'Hurry up, we've got to find out about what's going on in the financial space.' A good friend of the Treasurer's and one of his former colleagues, Mr Farrell, was apparently commissioned to do a second report for the government. It was supposed to be due in April. It didn't land on the Treasurer's desk until 1 June. Here we are, just about hitting September, but there's no sign of the report. We've got problems that are happening as I speak tonight. How many people will have used that technology while the government's not paying attention? That's why this legislation that deals with overseas banking units is actually too late to be good governance, but at least it's finally being done. Too often the government is found wanting in this space, where good action should be taken.

I contrast that with Dr Gary Johns's very significant neon signal that the government is doing something pretty dodgy with regard to charities—so dodgy that charities like St Vincent de Paul, Anglicare and other agencies that we know so many people in our community rely on are saying: 'Do not allow the government to put in regulation that's going to change what we are able to do, do not put a lot more red tape in place and do not attack us,' because that's what's happening, to the point where they put out an open letter.

So, with regard to this bill and what it does in terms of making sure that Australians can no longer be ripped off by overseas banking units, I will vote for this bill. I'm glad to vote for it and to finally close one of the most generous loopholes in our taxation system, a loophole that has been open for far too long. I look forward to working with all those in this place to ensure there is an ethical financial sector that makes money in an honest, non-exploitative way; one that pays its fair share of taxes; and one that, in this changing time of switching to a digital economy, is considered in a way that anticipates the exploitation of Australian small business owners and their customers, who deserve much better care, consideration and protection from this government than they are currently being afforded. This is too late. Everything's not a race to this government, but, in the end, the people who pay the price for it not doing its day job properly are the Australian people.