Andrew Bragg (NSW, Liberal Party, Shadow Assistant Minister for Home Ownership) Share this | Hansard source

It's a great pleasure to be able to make some remarks about the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. It's hard to escape the fact that the Labor government's tax policy has been a shambles since they came to office almost two years ago. This is just another example of the maladministration of the Labor government. I wonder if perhaps it stems from the absolute mess in the ministry where we see a Treasurer who has little to no interest in tax, we have an Assistant Treasurer who doesn't deal with any tax legislation and we have another assistant minister who apparently does deal with most of the tax legislation who last night said that the changes to the stage 3 tax cuts were a tax reform. Hilarious! If I introduce a tax bracket that was abolished by the parliament, apparently that's a reform.

This is the sort of world we're living in—a world where Labor's ambition for the tax system is virtually zero; in fact, it's negative. It's a negative ambition because you're going back and reinserting tax brackets that were abolished by the last parliament. It's remarkable stuff. The tax shambles is across the board, and it is a major problem for the country, because we're heading in the wrong direction on personal income tax and we're heading in the wrong direction on business tax. Of course, the government have also taken it upon themselves to break a slew of election promises in relation to superannuation and franking arrangements. This is a real issue. I think we can all agree there are major inefficiencies and major problems with our tax system. I'm sure that everyone in this chamber and in the House would agree that people find our tax system disincentivising, frustrating and ugly at times, but the options here for reform are virtually nothing, and the government's own policies that they took to the election, which were pretty threadbare in that they ran a small-target strategy, are not really going to lift the ambition at all.

I think the multinational tax piece is a good example. There is no doubt that base erosion and profit shifting has been a major issue, and everyone agrees that companies ought to pay their fair share of taxation. These are easy talking points for anyone, but, a bit like with carbon emissions, it's very hard for Australia to solve these things on its own. That's why working with multinational institutions is very important. It's why, when there's a debate about climate change, there's a conference-of-the-parties meeting, and it's why, when there's a debate about tax issues, particularly in relation to base erosion and profit shifting, there's a need for us to engage with the OECD and other international bodies. Of course, we don't want to have the balloon effect here, which is when we squeeze at one end and that causes a distortion elsewhere. We will just push businesses offshore. We are competing in a dynamic global market for capital and for labour, and that's why we should always try to align legislative definitions with global best practice. That is going to be the best way to defeat base erosion and profit shifting.

This particular bill, which has been at the Senate economics committee for some time, was heavily amended at the end of last year, and we had to do a secondary inquiry after the government introduced dozens of amendments. The government had to amend its own legislation dozens of times because the Senate committee recommended that it was not going to be effective as drafted. I wonder if that has something to do with a lack of ministerial engagement. It does seem strange to me that if you have a minister for taxation, which is effectively what the Assistant Treasurer is, that minister isn't dealing with this bill. It seems very strange that Dr Leigh has been given this bill, which has been subject to these dozens of amendments. Indeed, a second Senate economics committee inquiry identified more technical issues in relation to this bill. No-one disagrees with the thrust of the legislation, which is designed to rein in base erosion and profit shifting. In fact, going back almost a decade, governments of all colours have sought to rein that in. The issue here is whether the amendments are going to be effective or whether they will have perverse impacts on the economy.

Certainly the property industry would say—and they did say it to the Senate committee—that there are major issues in relation to the drafting. In fact, they said that there would be a problem with supply, in that, as the Property Council said:

… if passed in its current form, the bill will hurt project feasibility such that the investment returns of many large-scale projects—think housing projects …

The Property Council said that the 1.2 million housing target policy of the government was going to be put under threat by this bill. You don't need to be an expert on housing to know that the government's housing target policy of 1.2 million is already dead. It's a dead duck already. It's dead in New South Wales because Chris Minns said that he's not going to comply with Canberra's policy. It's dead in the water because the Labor government in Canberra has done nothing to promote supply. In fact, according to the people who will be asked to build these houses, this bill will make it much harder.

When we were running these various inquiries into this bill, I thought it a worthwhile initiative to ask the Treasury what sort of modelling had been done because, if the property, building and construction industry is saying to the parliament that this bill is going to make it harder to build houses, I would have thought that the government of the day would take that reasonably seriously. So, in the committee process, I said:

Given the importance of housing to this nation and how difficult it is for young Australians, particularly millennials and gen Zs, to get into a house, why wouldn't you and the government have commissioned modelling to look at the impact of this bill?

And the Treasury official said:

I think that goes to the difficulty in actually undertaking detailed sectoral analysis in terms of modelling those sorts of effects.

So a major tax bill that is going to impact the way the building and construction industry go about building houses has not been modelled at all by the government or the Treasury. This is baffling stuff. The reason that the private economy is saying that it's a problem is that it's going to play around with the debt deduction creation rules, and it's going to do that ahead of some of the global action that's going to be required to beat down base erosion and profit shifting. So, for reasons that are unclear to us, Dr Leigh has decided to progress the debt deduction creation rules that are going to cause great uncertainty to major housing projects. That is the major issue here when you look at the detail of the bill. The government want to press ahead with a policy they announced at the last election, which no-one will disagree with—to make multinationals pay their fair share of taxation—but by including these debt deduction creation rules, which have been the subject of two separate Senate economics inquiries, they are going to put development at risk.

Unfortunately, Australia has relied upon foreign capital since the First Fleet, and we still rely upon foreign capital. I don't want to see us become a country where foreign fund managers and major super funds own all the houses, but there could be a role here for foreign capital in helping build up our housing stock. We need to build more than a million houses in the next five years if we're going to be able to house our children, so I would have thought that we would want every option on the table.

We don't want to chase away good foreign investment which is going to invest in houses that Australians can live in. That is the great risk here with this bill—that the government has introduced a bill and is now seeking to pass a bill that will make it even harder for Australians to access a home. So, in addition to having no policies that will be followed through on housing supply and with a 'who cares' approach to housing demand, the government is putting at risk projects that would have gone ahead. We're seeing a great amount of neglect when it comes to housing policy in Australia, which is why I imagine the Minister for Housing is in a witness protection program and can't be seen in any major media outlets.

I'll finish on this point. It is very peculiar that the minister for taxation doesn't seem to want to have anything to do with his own legislation and is farming it out to poor old Dr Leigh, who has been sent to manage this mess of a bill, which is in such bad shape that it could undermine the government's own housing policy. I move:

Omit all words after "That", substitute:

(a) the Government amendments on sheet RU100 to the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023 be referred to the Economics Legislation Committee for inquiry and report by 5 February 2024; and

(b) further consideration of the bill be made an order of the day for the first sitting day after the committee has reported.