Andrew Bragg (NSW, Liberal Party) Share this | Hansard source

This is the second time I've been given an opportunity to speak to this bill, the Offshore Petroleum and Greenhouse Gas Storage Amendment (Benefit to Australia) Bill 2020; I also spoke to this bill in the last parliament. I acknowledge there are many laudable objectives that sit behind this private senator's bill. There has been a strong tradition in our system of parliamentary democracy where the parliament determines it is necessary to impose various laws to regulate the conduct of corporations, be they taxation laws, conduct rules, continuing protection rules, and so on and so forth. We're now living through a period where we have the greatest concentration of corporate power in the fewest possible hands. I'm talking here most directly about the concentration of power inside the big technology companies. But it has been the same for resources organisations and banking organisations. They have had, over the years, a very strong concentration of power. So, when you look at the best way to manage that, I think it's very important to apply principles. I personally am a subscriber to the Menzian form of liberalism, which dictates that you should have the minimal amount of government regulation in order to promote private investment and private capital coming into the market.

Now, here are a couple of the key facts when you look at the resources sector or any major part of the Australian economy. I always start with the fact that we don't have enough money to run this country. We never have had, and that is why we have relied so heavily upon foreign capital for the past 250 years. As far as I can see, there are no pools of domestic capital which are going to come to our rescue and fund these major resources projects. Certainly, the major pools of capital which it may have been possible to use for this purpose can't be used, because the superannuation funds have a sole-purpose test. They are only allowed to invest for the purposes of their members' retirement savings, and whatever you may think about that scheme, that is, I think, a sound principle which should not be pierced at any time in the future.

But it is, therefore, the foreign investors that will be required to fund these projects, and I note that there are great debates about the use of fossil fuels. I think there is no doubt that there will be a need to use gas in the future for many decades, and whether you look at the view of the scientists, the chief scientists and the former Chief Scientist Alan Finkel or whether you look at the major investors like Larry Fink of BlackRock, everyone is of the view that in the short to medium term there is going to be a need for gas. So the idea that we're not going to have any more gas means that we're not going to have any more electricity or any more lights on in Australia, which is very worrying; it's very concerning.

So we are where we are; we need to get the gas out of the ground. There will be a need to fund that activity and, as far as I can see, there is no domestic pool of capital which is going to allow that to happen, and that's where the foreign capital comes in, and we need to send the right signals to the market that we're not going to engage in undue sovereign risk. Certainly, we have seen this movie before. We saw Mr Connor and his attempts to try to engage in some kind of quasi-nationalisation of resource assets in the 1970s, which led to what was, I think, 15 per cent inflation and a major economic catastrophe which had to be resolved with various measures.

So we have seen this movie before. I don't think we want to go back to that particular period, so we need to send the right signals that we as a country want to have that foreign investment. We want to have that foreign investment on the right basis. We will certainly be imposing conditions on corporate activity in Australia, and I think there is a case to be made for some of these organisations to pay more tax. Certainly, my former profession of accounting has done some good things for humanity, I'm sure. But it has also done some rather evil things, and I think that transfer pricing, which has led to the base erosion and profit shifting where, effectively, companies have been able to establish a mining organisation in Singapore, is frankly outrageous. I don't know that there are that many mines in Singapore or many more resources projects in Singapore, but certainly they are managing to pay a very low rate of corporate tax in Singapore on the back of their significant projects that are being undertaken in Australia.

Now, I'm for lower taxes and I think it's great that Singapore has been able to cut taxes, and I wish that we could have a similar trajectory here in Australia. I note that the UK is now looking to reverse its misguided policy of raising corporate taxes, and we look forward to the UK heading back to a corporate tax rate which I think is going to be 19. So we should be seeking to compete with Singapore, as well as addressing the major issue of base erosion and profit shifting, which is the mechanism by which the resources companies have been able to fleece Australian taxpayers of taxation revenue. I think there are certainly areas here that have been raised by the crossbench that are worthy of further consideration, certainly in terms of the tax burden that is placed on some of these foreign multinationals. As I say, we need to do it in a way which is not going to spook foreign investors, but certainly we can do it in a way which is at least going to have a better return to the Australian taxpayers.

I would say that there are some laudable objectives here, and I think it's good we have an opportunity to raise some issues that are not the issues of the government of the day, and that's what we're here to do as a Senate. I am pleased to make a second contribution on this bill after making a contribution on it in the last parliament. I would summarise my comments here by really reminding the Senate that it is very important that we are cognisant of the fact that we don't have enough domestic capital to fund these major projects.

For people that believe these projects do need to be financed, that finance needs to come from somewhere. There is no domestic pool of capital that is going to be able to meet this investment need, so therefore we need to send the right signals to the global capital markets that we are a stable democracy that has reasonable corporate laws that are clearly understood and that don't have terms which are not easily understood or are too broad. In the case of this bill I think there is no doubt that the benefit to the Australian community test would be a very, very broad test. It would be hard for a court of law to define what that is. As a legislator, I don't think it is our role to handpass our role to the courts down the road and let them effectively become a quasi-legislature. That is our role. If people want to put a more specific concept on the table, they should do that. That's the first one. We don't want to spook foreign investors; we need to have clear corporate laws.

The second point I want to summarise is that in terms of taxation—this is not a tax bill, I should note—I think there is a very strong case for some of these foreign multinationals to pay more tax. I regret very much that my former colleagues in the accounting profession have done so much damage to our taxation revenue collection system by devising these schemes. I do think that it's going to be difficult for us to resolve the base erosion and profit shifting issues without some sort of coordinated effort with other like-minded countries, and I'm sure that we can do that in the years ahead. As I say, I think there are some laudable objectives here, but we need to do a bit more work on it.