Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

A letter has been received from Senator Moore:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The Abbott Government's failure to address multinational tax integrity while attacking the living standards of pensioners, students and young jobseekers.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

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

Thank you very much, Mr Acting Deputy President. I am very pleased to make a contribution in respect of this MPI relating to the failure of this government to address multinational tax integrity whilst attacking the living standards of pensioners, students and young job seekers. Of course, the premise of the MPI is the fact that we have a government based on broken promises and twisted priorities. There is nothing more evident in that in relation to this propensity of the government to attack the living standards of pensioners, students and young job seekers whilst, at the same time, leaving the big end of town alone and with various tax arrangements which need to be looked at.

We have a government that last year claimed that there was a budget emergency. You would think that a government that really believed that would do everything in its power to improve its revenue streams, but of course what we see is, in fact, the attacks on pensioners, the unemployed and students. We know that the government has moved away from that rhetoric of a budget emergency. I note that recently in New Zealand the Treasurer admitted that there was, in fact, nothing wrong with the Australian economy. As everybody here knows, Australia has a relatively low international debt and the growth rate of the Australian economy is amongst some of the best in the world. It is perverse that we have a Treasurer who uses the terminology of 'lifters' and 'leaners'. What the government is doing in this regard—or, more precisely, what they are not doing—is they are giving the leaners a head start by going too slow on tax reform. A 2013 paper by the Treasury titled 'Implications of the modern global economy for the taxation of multinational enterprises' states:

As chair of the G20 in 2014, Australia can have a prominent role in determining and driving this reform agenda.

As chair of the G20, Australia should be leading from the front, and it is time for Mr Hockey to step up to the plate. Empty talk will not cut it for tackling multinational tax. There is a significant gap between this government's rhetoric and its actions when it comes to ensuring that multinationals pay their fair share of tax within Australia. I draw the attention of the Senate to the fact that the previous Labor government did make an attempt to address this particular issue. I refer to the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013. When given the opportunity, the members of the coalition did not support this attempt by the previous Labor government to address this issue.

It simply is not fair that major Australian companies operating internationally can shirk their tax responsibilities. Companies that earn profits in Australia must pay tax in Australia. I think people on all sides in this place would accept that basic principle. Multinational tax avoidance leaves small businesses and everyday Australians to pick up the slack of paying for government services. Major companies benefit from Australia's highly educated workforce, our extensive road, rail and port infrastructure, our secure energy supply and our willingness to attract investment. It is reasonable that those companies should also make a fair contribution to the tax base, which funds those things. Unfair tax arrangements advantage large multinational companies over domestic Australian companies. This is unproductive, inefficient and unfair.

Labor has a proud record of reducing multinational tax avoidance. When in office, Labor introduced key reforms that would have prevented $5 billion in revenue from being moved offshore. Unfortunately, the government is not fully implementing these measures and this is costing the budget over $1.1 billion. I, again, refer to the bill from 2013 that I mentioned previously, and when addressing that bill, the current Treasurer said:

We really must start this debate by asking whether these amendments are required at all.

He went on to call measures in the bill:

… an unnecessary overreaction. More red tape for business …

In addition, I note the contribution by Senator Cormann in relation to that same bill. He said:

… we do not support Labor Party knee-jerk overreactions in the face of yet another desperate attempt to raid more cash to feed its spending addiction …

Senator Cormann went on to attack the ATO on behalf of big business. In extraordinary comments, he said:

There can be a large disconnect between the way business is properly conducted and the way the government, in particular the Australian Taxation Office, would require business to be conducted—because, quite frankly, the Treasury and the tax office invariably do not understand how business actually legitimately operates.

I wonder if the finance minister still has the view that Treasury and the ATO do not understand how business operates—that is an extraordinary statement.

I note a recent report released by the Tax Justice Network found that, overall, the effective tax rate of ASX 200 companies over the last decade was 23 per cent. If these companies had paid at the statutory rate of 30 per cent, this would have produced an additional $8.4 billion in corporate tax annually. Despite this, the Treasurer has been all bluff and bluster on cracking down on multinational tax avoidance. He boasts that by committing to a 2017 start date for the common reporting standard on banking information, Australia is moving towards better financial transparency. What he did not say was that his proposed timetable lags behind the early adopter group of nations like the United Kingdom, Argentina, France, Germany, India, Italy and Mexico. Despite his bold rhetoric, the Treasurer's timetable puts Australia behind over 40 other countries. The Treasurer is all talk and no action.

These are not fringe issues. As The Age reported on 6 September this year:

There is stark evidence that Australia's corporate tax base is being eroded, with the burden of revenue falling increasingly heavily on individuals. The proportion of income tax collected from business in Australia has shrunk over the past five years, falling from 23 per cent in 2007-08 to 19 per cent in 2012-13 according to the Australian Bureau of Statistics. At the same time, the proportion of income tax collected from individuals rose from 37 per cent to 39 per cent.

But it is not only our own tax revenues which benefit from a more transparent and fair tax system. As the Micah Challenge state in their submission to the earlier mentioned Treasury inquiry:

Australia's stance on tax law, policy and international arrangements around tax also have a clear connection to the capacity of governments in developing countries to secure sufficient and sustainable sources of financing for development. Pressing for reform on the international tax system also has the potential to build and strengthen norms of transparency and accountability among and between governments, citizens and business- particularly multinational enterprises.

In March this year, the tax office announced it was investigating 86 major international firms for allegedly shifting profits offshore. It is estimated the combined cost of these schemes is more than a billion dollars a year in lost tax revenue. The government is in need of doing something about this issue. Hollow rhetoric will not suffice. The government is making up for its inaction through cuts to essential services and programs that support the most disadvantaged in our country. And the budget also shows the government would prefer to take revenue— (Time expired)

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

What a pleasure to follow Senator Ketter in this debate. From the sounds of his measured, moderate contribution to this debate, I look forward to more debates. Senator Ketter, the time when the Labor Party could lecture anyone on budget superiority, on budget certainty, on budget balancing will be the day hell freezes over. For the Labor Party to try to lecture anyone on budget matters is just so amusing that I really cannot take you as being serious. You have no doubt been left with the motion and you have done your best to prosecute it.

Mr Rudd, you might remember—long before your time so I do not blame you for overlooking these things—had the 2020 Summit.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Was that Rudd 1 or Rudd 2?

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

This was Rudd 1. There were all these fine ideals about tax reform and a huge very expensive two- or three-day talkfest. We had the Henry tax review as a result of it. The Henry tax review took hundreds of days and hundreds of thousands of dollars and came up with a set of suggestions. The then Labor government completely ignored all but one or two of them. The only one it picked up it seemed was an abortion of the MRRT. That then turned out to be such a mess that in the end every Australian understood that it was a useless tax that was costing more to collect than it was actually collecting.

You will remember Mr Swan promising every year that he would get a surplus. It never appeared. Nobody ever expected it would. I think not even Mr Rudd or Ms Gillard themselves ever believed his or her Treasurer when he indicated he was going to bring in a surplus. So, as I say, let the Labor Party lecturing on tax is a non sequitur. I could go through a whole series of examples but time does not permit that and they are all well known.

Your motion talks about attacking the living standards of pensioners, students and young jobseekers. The biggest attack on the living standards of pensioners, students and jobseekers was paying $33 million each and every day to foreign lenders on money that the Labor government had borrowed. That in itself adds to the cost of living. It means that living standards that could be paid for with that $33 million a day were not being paid and it meant that we had to introduce the difficult and very stringent budget that we see today.

This concern about international tax is something that we on this side have been looking at for some time. And I pay credit to my colleague Senator Bill Heffernan, who, for years, has been talking about the way big multinational companies do not pay their fair share of tax and about how they enter into schemes where the tax, if any, is paid overseas in countries which have a lower tax rate than Australia.

Before I hear further pious words of the Greens and the Labor Party, could I ask either of them why they did not support my motion a couple of months ago for the Paid Parental Leave scheme to be deferred until later and for the money being collected from companies to fund that scheme to be put into addressing the bottom line of the budget? Did the Greens give any support to that? I heard them rabbiting on in question time today about the tax that multinationals pay. But when they had the opportunity to do something about it a couple of months ago in this chamber they were absolutely dead silent. They would not even cross the floor to help me in supporting the proposal that the additional tax collected from companies be diverted to paying off Labor's budget black hole.

Again, as is typical with the Greens, it is all hypocrisy: say one thing, do another. It is so typical of the Greens. They are all about free speech and yet when an issue comes up and an inquiry is undertaken by this chamber—improperly set out, I would suggest, and one that I am sure will nevertheless be overturned in the High Court—how many of the 33 government senators do the Greens give the opportunity to to participate in that inquiry? Just one. How many from the Labor Party, with 25 senators? Two. And how many from PUP, with three senators? One. And the chairman, on a big salary. This is the Greens hypocrisy. It just demonstrates, time and time again, why you cannot believe, trust or even try to negotiate with the Greens.

In relation to that Queensland motion, Greens' leader Senator Milne was out of the chamber and the rest of the Greens agreed to include the Labor Party in that particular inquiry. I could not believe my ears. I thought that all the things I had been saying about the Greens for 24 years had been wrong. But I was right. You simply cannot believe the Greens. Senator Milne came back to lead the Greens political party. The sensible compromise that had been negotiated by the Greens Whip and a couple of sensible people in the Greens political party was overthrown by the leader and the leader went back to take out her absolutely pathological hatred of anyone who is not on the Left side of politics.

So whether it is on this matter of multinational tax integrity or whether it is on a matter of inquiring into other governments or preventing senators from having their say, the Greens are just full of hypocrisy. Not only do they vote to set up this committee, which does not stand any test of fairness or propriety but, more than that, the Greens cut off debate.

When Labor was in government and the Greens were their lackeys, supporting them all the way, we had so many guillotines and gags on debate that we lost count. But we thought that, with the change of government, perhaps there will not be quite so many gags, guillotines and restriction of debate moved by the government and there has not been. I think it has only happened once, as opposed to 400 or 500 times under the Labor-Greens regime. But today we have Labor and the Greens, again, joining together for another couple of gags. And this is the Greens political party, which will go out there and tell all their followers, 'We're all in favour of free speech and accountability.' Have a look at this dodgy committee which has just been set up! Accountability? With two Labor members, one Green, one Palmer United and just one government senator. Accountability simply goes out of the door when it applies to the Greens political party. The idea of everyone having their say, everyone having the ability to play their part in this chamber and fully discuss matters, again, goes out of the door when the Greens political party join with Labor to curtail debate.

In the few seconds left to me, can I just congratulate Joe Hockey, a fabulous Treasurer. He has done an excruciatingly good job in trying to correct Labor's mess. I remind anyone who might be listening to this debate that Labor, in six short years, left a debt approaching $600 billion for every Australian, paying their share of $33 million each and every day—I repeat, each and every day—to pay off Labor's debt to foreign lenders. That is the sort of tax mess that Mr Hockey has had to address. He is doing a wonderful job and I wish him every support in his ongoing job of fixing Labor's mess. (Time expired)

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We have an opportunity in parliament this afternoon during this matter of public importance debate to debate a $1 trillion scandal around the world. What did the taxpayer get from Senator Macdonald in the last 10 minutes? Verbal vomit and tripe. This issue is not going to be swept under the carpet, through you, Chair, to Senator Macdonald. Australia has to take on corporate tax avoidance. We have to do it with the rest of the world. It has been reported that, globally, more than $20 trillion in tax is avoided and put into tax havens. Tax avoidance in Australia has been outlined in a comprehensive report that was referred to by Senator Milne in question time today, compiled by the Tax Justice Network. This network, working in collaboration with a large number of stakeholders, has looked at Australia's specific circumstances and it has come up with a figure of at least $8.4 billion in lost tax through multinationals each year.

We have tax avoidance problems with individuals, which the tax department is tackling through an amnesty. On the same hand, we have cuts to the tax department—savage cuts to staff, savage cuts to resources. When we know that $1 invested in forensic work to chase tax cheats is going to pay a good dividend to the Australian voter, to Australian citizens, we are cutting resources to the tax department. Let us hope the amnesty works. I will certainly look forward to asking more questions about that at upcoming Senate estimates—as will other senators.

What I am really interested in is this question of tax avoided in Australia. We have an estimate from a study here today, but what is the government's—Treasury's—own estimate of tax avoided in this country in recent years? Are we confident that we are tackling this problem properly? Can we confidently say in forward estimates that we are going to bring in billions of dollars of revenue—billions of dollars that are desperately needed to pay the bills?

It was interesting listening to Senator Macdonald, because he obviously has no understanding at all of the history of this country. Since Federation, this country has run current account deficits. Anyone who understands economics would know that current accounts include government spending. Current account deficits mean that we always borrow, in the private sector and in the government sector. We have always borrowed from overseas, since Federation.

I do not hear anyone talking about the interest on the borrowings that we have, and have always had, in the private sector. All we hear is this same mantra of the daily interest rate bill. If that money is being spent productively—being invested into our communities, our schools, our social welfare systems and the networks that help people get up and running when they need that help—then that is a good, productive investment in our country. And it will be paid back.

We get a very limited level of economic debate from that side of the chamber because that is what suits their propaganda. I will be very interested to know what the government is forecasting in terms of revenue from stronger action on tax minimisation. What is this tax minimisation? At a corporate level it is often referred to as 'profit shifting' or 'base erosion' and 'transfer pricing'. Essentially they are pretty similar concepts. It is when multinational corporations plan or put in place a planning process to allocate costs and revenues to different locations to reduce their tax liability.

As outlined in the report Who pays for our commonwealth? tackling corporate tax avoidance is an urgent priority. We see very high gearing ratios amongst the ASX 200, which means that they have high debt levels; and there are issues with interest repayments, which are tax deductible; and it is a good way of avoiding tax. I will get to the point in a minute that, unfortunately, these things are legal. There are loopholes in tax systems all around the world because we do not have harmonisation between countries that have the same tax systems. This allows multinational corporations to exploit different tax rules in different countries and get away with it. So, apart from the fact that we have to take a much stronger stance and crack down on tax avoidance or tax dodging, we also need to look at how we change the rules, both here and globally, to tighten up what is essentially an unfair avoidance of tax by multinationals.

Here are a couple of conclusions from the report that I referred to earlier. Within the ASX 200 companies, nearly one-third have an average effective tax rate of 10 per cent or less; 57 per cent disclose subsidiaries in secret jurisdictions, which are also commonly referred to as tax havens; and 60 per cent report debt-to-equity levels, as I mentioned—high, but in this case over 75 per cent, which artificially reduce taxable profits.

We recently raised this issue at the G20; our Treasurer raised this issue. It has been around for years; tax dodging by multinational corporations has been discussed in parliament and in media circles for decades. Now we are finally getting around to being part of a global cooperative effort to do something about it. But if you read the media there is a lot of cynicism that anything is going to get done.

Information sharing is great—it is a good start—but there is a lot more that could be done to avoid tax-dodging and tax minimisation, which essentially is a legal way that multinationals avoid paying tax in their country. But we all agree on one thing. The communique released after the G20 meeting in Cairns last week said: 'Profits should be taxed where economic activities deriving the profits are performed and where value is created.'

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I agree with that.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Good. In this case, we hear stories about companies that do not pay any tax in this country—for example, James Hardie, Westfield Retail Property Trust, large mining companies, 21st Century Fox—we have some really clear examples of companies that are very large players in the Australian landscape who are not paying tax. If it is true that we are in a budget emergency—although I note that that rhetoric has been toned down considerably in the last six months—if it is logical that we need more revenue, and I think we do, we can raise revenue through a fixed mining tax and through a price on carbon. That would be tens of billions of dollars that we could spend not just on investment but on the most needy in our country; providing that safety net of social security and health that we desperately need in this country. I think that in itself is a good investment in our people. This is not all about businesses; it is not all about infrastructure; it is about people. People are the key ingredient.

The Greens moved over the weekend to have an inquiry—which I certainly hope we will be able to get tripartisan support for—to look at this issue of tax minimisation and tax avoidance and give certainty to stakeholders in this country. When I say 'stakeholders', I am talking about hundreds of different organisations—church groups, unions, social welfare groups et cetera—who want to see this issue fixed once and for all. They want to see real action by our government to crack down on tax dodging in Australia.

It is not going to be easy. You can do it in one country, but it really needs to be done in multiple countries for it to be effective. Why is that? Senator Williams, it is because we are dealing with multinational companies—that is, they have jurisdictions in more than one country. That allows them to do the types of profit shifting and transfer pricing arrangements that I highlighted. If we do not have cooperation from other countries, we will not succeed in this endeavour—and that needs leadership. Like we took leadership on climate change—and then it was ripped down by the coalition government—we need to take global leadership on this issue. The Micah Challenge, the Oaktree Foundation and all the stakeholders are saying to us, 'Get out there and take a global leadership role and let's get this done.'

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I recently spoke on the matter of multinational tax avoidance during the adjournment debate, and I rise today to do so again. All countries need strong measures and strong cooperation to ensure that multinational companies pay their fair share of tax. When multinationals do not pay their fair share, it falls to others to pick up the tab. The tax burden shifts to ordinary workers and small business owners, and it creates an uneven playing field where small businesses are competing with large multinationals who gain a competitive advantage by paying less tax. This is fundamentally unfair.

During my adjournment speech I mentioned the campaign being run by the Tax Justice Network to eliminate multinational tax avoidance. I gave an example of a poor worker in Zambia who paid more absolute tax than a multinational company in the same country and the same industry. Australia owes it to everyday Australians who pay their fair share of tax to effectively combat multinational tax avoidance. But we also owe it to the world's poor to be part of the global effort against multinational tax avoidance.

I mentioned the Tax Justice Network earlier. Recently they released a report which showed that the ASX 200 companies—the top 200 companies in Australia—had an effective tax rate of 23 per cent. This is despite Australia having a corporate tax rate of 30 per cent. Had these companies paid an effective rate of 30 per cent, they would have provided Australia with an extra $8.4 billion in corporate tax revenue every year. The 23 per cent rate was the total across all the ASX 200 companies. In fact, a third of these companies were paying 10 per cent or less in corporate tax and 14 per cent of these companies paid no tax at all. The report also found that 57 per cent of those companies had subsidiaries in what is labelled 'secrecy jurisdictions' or jurisdictions with low financial transparency.

We live in an increasingly globalised and digital world, where commercial transactions are taking place across national borders in larger and larger volumes. Multinational companies use clever and complex schemes to shift their profits from high-taxing to low-taxing jurisdictions to minimise the amount of tax they pay. So, when it comes to combating multinational tax avoidance, we need to be ahead of the game. We need to be moving forward, not backward. And we need to ensure that profits earned in Australia are taxed in Australia. We owe it to all the Australian workers and small businesses who, unlike multinational companies, have no choice but to pay tax in Australia on all of their taxable income.

Labor has a proud record of combating multinational tax avoidance; introducing reforms in government which prevented $5 billion in revenue being moved offshore. Sadly, the Abbott government are refusing to fully implement these measures, a decision which is costing the budget $1.1 billion. In other words, instead of building on Labor's reforms, this government are actually moving backwards.

One of the measures the government are trying to dump is Labor's tax transparency reforms. Labor in government introduced measures which required companies earning over $100 million a year to disclose their total income, taxable, income and tax paid. However, the Abbott government want to repeal this measure. The government are also not proceeding with reforms announced by Labor to tighten the offshore banking unit regime, nor is it proceeding with the changes to reporting for multiple entry consolidated groups. The government are continuing the poor record on multinational tax avoidance that they had in opposition, where they voted against the previous Labor government's legislation to plug loopholes in Australia's transfer pricing rules and anti-avoidance provisions, and to crack down on companies overvaluing assets in international transactions.

While going backwards on multinational tax integrity, the Abbott government are also making savage cuts to the Australian Taxation Office, which will make it more difficult to pursue multinational companies for tax compliance. The government announced in this year's budget that they are cutting 4,700 staff from the tax office, leaving them underpowered to investigate the tax compliance of large multinational companies. The ATO announced in March this year that they are investigating 86 major international firms for allegedly shifting their profits offshore. The Commissioner of Taxation has said that every dollar invested in ATO staff generates between one and six dollars of revenue. Remarkably, the Abbott government's budget cuts to the ATO will therefore end up costing Australia more revenue than they save.

The upcoming G20 meeting in Brisbane, and Australia's presidency of the G20, has the potential to be an opportunity for Australia to take a leadership role on multinational tax avoidance. Instead, we have a Treasurer who is boasting that Australia is moving towards better financial transparency by committing to a 2017 start date for the common reporting standard on banking information. This is in contrast to nations like the United Kingdom, Argentina, France, Germany, India, Italy and Mexico, who are early adopters of the standard. In fact, Mr Hockey's timetable puts Australia behind 40 other countries. Mr Hockey, the Treasurer, is all bluff and bluster about seriously addressing multinational tax avoidance. If he is serious about the problem then he needs to tell the Australian people not only what his plans are but also how much revenue they will add to the bottom line. So far the only changes the government has made to Australia's multinational tax regime which affect the budget bottom line are ones which have resulted in less—not more—revenue. As I said before, together these measures add up to $1.1 billion in revenue. It is absolutely galling that a government which uses a 'budget emergency' to justify slugging everyday Australians $7 every time they visit their GP, to justify cutting pensions and family payments and to justify forcing job seekers to live on nothing but fresh air for six months, would let multinational companies off paying their fair share of tax to the tune of $1.1 billion.

If there is a real budget emergency, then why would this government not proceed with Labor's sensible reforms to make multinational companies pay their fair share of tax? Why would they forgo over a billion dollars in revenue? Is this the 'great global leadership' to which Senator Cormann was referring during question time today? The answer is simple—there is no budget emergency. We had this confirmed just two weeks ago by 63 of Australia's leading economists.

The coalition's actions since coming to government deny their rhetoric about a budget emergency. After all, this is the party which decried debt and deficit in opposition, yet soon after coming to government they doubled the deficit and substantially blew out the timetable for achieving a budget surplus. If Australia is truly experiencing a budget emergency, surely it makes sense to tighten the rules to clamp down on multinational tax avoidance, not to relax them.

The manufactured budget emergency is just an excuse, a cover, for the Abbott government's real agenda. That agenda is to help the big end of town at the expense of struggling Australians. Of course they will deny it, but the evidence speaks volumes. At the same time as this government's cruel and unfair budget makes savage cuts to vital government services and to assistance for small businesses and struggling Australians, the government is doling out gifts and tax breaks to the big end of town. This is the government which is giving a tax break to billionaire miners, this is the government which is writing out $50,000 cheques to millionaire mums, this is the government which is giving generous tax breaks to 15,000 of Australia's wealthiest superannuation account holders, and, as we have heard in this debate, this is the government which is giving multinational companies a $1.1 billion tax break instead of working to make them pay their fair share of tax.

These are the actions of a government which has its priorities all wrong, a government which would rather cut income from pensioners and families and tax sick Australians than make sure some of Australia's largest companies pay their fair share of tax. These are the actions of a government which puts the interests of its wealthy mates in big business ahead of struggling small business owners and vulnerable Australians. It is time for this government to get serious about multinational tax avoidance and work to close tax loopholes, not relax them. As I said, when multinationals do not pay their fair share, it falls to others to pick up the tab. The tax burden shifts to ordinary workers and to small business owners. It creates a very unlevel playing field when small businesses are competing with large multinationals who gain a competitive advantage by paying less tax. It is high time this government got serious about multinational tax avoidance. (Time expired)

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I find it amazing that those opposite would want to talk about tax. It is just amazing. Let us have a look at your record.

Opposition Senators:

Opposition senators interjecting—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

We are getting a bit of a reaction! I must have touched a nerve. Let us look at your record of budgets and tax and income and expenditure. The last time you delivered a budget surplus, Senator Dastyari was six years old. There has been a lot of water under the bridge since then.

Let us have a look at the record. I want to take you to fuel excise. When the Hawke-Keating government was elected in 1983, the tax on fuel was 6.3c a litre. When they left in 1996, that had grown to 34c a litre—6.3c to 34c. It was the Howard government that froze that excise at 38c. It grew from 34c to 38c and then it was frozen in 1999-2000. Yes, we want to bring indexation back now to fix our roads. That is why I support it—to fix our roads.

Senator Bilyk interjecting—

Mr Rudd promised no new taxes. I wonder if Senator Bilyk can remember the luxury car tax. Do you remember the luxury car tax? There were to be no new taxes! That did a great job for Holden, didn't it? That really helped Holden get on their feet! Because someone worked hard and could afford an up-market car—let's tax that! Then there was the alcopops tax. That was going to solve all the problems of binge drinking.

Then Prime Minister Rudd, I think it was—it was hard to keep track of the Prime Minister in the previous government; it was hard to know who was Prime Minister at any time—gave us the superprofits tax. That was going to generate all the revenue. Then Prime Minister Gillard was going to solve all the problems with that tax by bringing in a minerals resource rent tax. She did exactly that. She spent $16 billion, but the tax did not raise any money—a total of about $300 million over the years. Then there was the carbon tax, the carbon tax we were never going to have. It did absolutely nothing to reduce CO2 emissions in Australia.

I do not think there would be one senator in this chamber who would not agree that, if you make money in this country, you should pay the tax in this country. That is fair. Life is about fairness and that is a fair way to be. We are well aware of the issue. My colleague Senator Heffernan has been pushing this barrow for a fair while, I can assure you. If you make the money here, you pay the tax here. We know about Google—why they are set up in Ireland—and we know about many of those other big companies, such as Apple. We know they are avoiding paying their share of tax.

But I want to point out Labor's record on tax reform. It really is embarrassing. Do you remember former Prime Minister Rudd holding his 2020 summit? He invited the talented and the opinionated. He got out the butcher's paper and came up with his thought bubble on tax reform—the Henry tax review. We heard all about the Henry tax review. So important was the Henry review that Labor did not release it until just before the budget in 2010—even though it had been given to Treasurer Wayne Swan in December 2009. Why was it not made public? What were they hiding? This is their history on tax reform. What came out of the Henry tax review? As I said, the resource super profits tax, which was expected to raise $49.5 billion over five years. Yes—$49.5 billion—an academic's tax with little thought for practical consequences. In July 2010, the resource super profits tax proposal was replaced with the minerals resource rent tax—another complex tax, and I have mentioned the figures on that. The original MRRT estimate was that it would raise $10.5 billion in its first two years to July 2014. In fact, just $340 million was raised in net terms in that period—less than $20 per Australian.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Have you got any figures there on cost shifting?

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I will get on to cost shifting, Senator Whish-Wilson, and I will get on to transfer pricing. I will take your interjection. That is why I do not like transfer pricing one bit, especially when it comes to countries and governments buying our farms, growing the food and taking it back to their country. I will give you an example: if a foreign country buys a property and it costs them $1 million to plant a crop of wheat, and it might be a good season and they harvest $2 million worth of wheat. They actually sell that wheat back to their country for—guess what? One million dollars. The country buys the wheat at half price. Costs are $1 million; income is $1 million. No profit, no tax—they just transfer it overseas. It is wrong, and that is why I am very pleased to say that Treasurer Joe Hockey is leading the fight on this very issue.

No doubt this will be raised at the G20 in Brisbane in November and discussed at length. I agree with you, Senator Whish-Wilson—this has to be a global effort. The countries have to combine together to share information on those who are dodging tax in this country, and any other country around the world. I am sure those in many countries see money transferred out of their country and tax avoidance by the big end of town, when they need to pay their fair share in those countries as well. It is Treasurer Joe Hockey who is leading this very fight to capture those in the net who make the money in this country to pay the tax in this country. If they do not, who is going to pay the tax? The small Aussie battlers, the small businesses? Or are we going to go down the road of Labor, which we do not want to go down, of more budget deficits, more borrowing—in other words, mortgaging our children's future away. That is certainly not sustainable, and it is a road to a brick wall. We have seen what the previous government did—$240 billion of government budgets in just six years and hence the $340-odd billion of gross debt we have today.

As I said—and I know my colleague Senator Heffernan will certainly continue this argument in far more detail than I have given this chamber—if you earn the money in this country, you pay the tax in this country. And I welcome Senator Heffernan's phone ringing, and countries working together—starting off with G20 in November, with Treasurer Joe Hockey leading the reforms.

Joe Ludwig (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Again, what we heard from the Nationals, the supporters of the Liberal Party, is simply rhetoric, and empty at that. What they are now saying in effect, if you boil the speech down and if you forgive his inability to understand how fuel excise has worked—is that the Howard government froze it and then put in indexation. He brushed over that a little bit quicker than he should have.

Senator Williams interjecting—

He might want to bite now. People in rural Australia do understand how indexation will mean that their fuel will increase in price over time. He touched on fixing our roads. If you look at Labor's record on fixing roads over its term in government, it outshines yours by a country mile. If you look at his gloss over, really the MRRT in total, what he does not say, ultimately, is how regional and rural Australia will benefit from an MRRT and how small business would have benefited from accelerated depreciation and from a range of measures. It glosses over that completely. What we also did not hear is how we address the issues around climate change. Yes, if you are opposed to a carbon tax, if you are opposed to an emissions trading scheme, if you are a complete denier of climate change like the Nationals are, then I accept what Senator Williams is saying. But it is wrong.

Then suddenly at the end of his speech he dealt with the substance of what this argument is all about. This is about a treasurer, Mr Joe Hockey, who is not serious at all about cracking down on multinational tax avoidance. If he was serious about it, we would be seeing him take the argument domestically into the G20, but he does not. All he wants to do is to walk the walk and talk the talk but ultimately to lead us nowhere. He does not intend to deal with the issues at hand. By not proceeding with sensible measures which we implemented to close tax loopholes, the Australian people will be forgone in the order of $1.1 billion in revenue. To put this in perspective, that is about a new hospital that could be built. What this government is all about is talking loudly but taking no action. If you look at how they have ripped money out of the tax commissioner and sacked public servants, they have left the tax office woefully underpowered to go against these global firms. We do not have any real leadership in the G20 to look at tax scams or to argue how we can ensure multinationals pay their fair tax. What we do have is a weak and equivocal government that will get rolled on this issue in the G20 and will then use some tough words to dress up what is in fact a rhubarb pie.

What we have is a government that is also attacking those who can least afford it. Where Labor increased the pension, looked at how we could assist pensioners and how we could provide support for students, where we looked at how we could, in the longer term, assist those who are less advantaged than ourselves—this government is ripping it all away.

More fundamentally, at the last election Mr Abbott promised that there would be no cuts to health, no changes to pensions, no change to the GST and no cuts to the ABC or SBS. This budget included the opposite—it is a budget of broken promises. This coalition government cannot even manage its own house to ensure that it delivers on its own promises, let alone deal with the big end of town, attack those firms that do have the capacity to pay and make a reasonable contribution to international action. (Time expired)

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

I thank Senator Seselja for his space in this play. I could probably take an hour without notes and give you all the details without any political background or crap. There are nine tax havens in the world that have zero tax for corporates, and they are fundamentally used as a normal procedure now for most multinationals. There are also countries like Singapore that have a tax rate of 15 per cent. Obviously no-one is breaking the law under the present regime and that is why John Phillips, the past chairman of the Foreign Investment Review Board, said the whole act and the international convention on tax needed to be rewritten. Obviously it has to be done as a group of nations, which is why Swan when he was Treasurer sent his Treasury officials around to see me for two hours. They did not understand what a derivative swap was—and hands up all those in the chamber who can give me a tutorial on how derivative swaps work. No? No-one knows that that is part of the mechanism. The legislation that protects our revenue base was written when it used to take six weeks on a ship to go to England to play cricket. As John Phillips said, it needs to be brought up to date.

We welcome foreign investment but it has to be on a level playing field so it does not distort the capital market, does not distort the commodity market and does not distort the revenue base. As Senator Williams said, with sovereign investors, our acquisition act does not deal with foreign acquisition. If under the international convention you are a sovereign investor and you come out here and declare your income from the production of whatever it is you have invested in, you get charity status if it is for a humanitarian purpose—you bypass the tax system altogether. Obviously transfer pricing has a real part to play in this, and of course there are the likes of ADM. I chaired that inquiry. One of the reasons I did not appreciate what they were up to is that they are serious corporate crooks when it comes to tax. Having left here, having said they had turned over a new page, they got a $700 million bill in the US.

If we are going to deal with this we have to understand the enormity of the problem. I agree that it is not fair on wage earners to have to pay more tax. Institutions were in denial for 50 years about what they were doing with kids, and all of a sudden everyone is up apologising at the royal commission: 'Yes, it has been going on and we apologise.' Tax, internationally, has got to that stage. It is normal behaviour now for multinationals to expect to pay minimal max, whether it is through transfer pricing, thin capitalisation, the derivative swap market or deadset charity status. We need to get the legislation up to date and I congratulate the government on taking the lead at G20, but Swanny took it up as well. He took it to an earlier G20. I appreciated him sending people around so I could explain to them what a derivative swap was. The US do not like us saying this, but the US is technically insolvent. The largest debt they have is $5 trillion to their own pension fund, which is a double debt. Last year they estimate they missed out on $600 billion through tax avoidance. By way of interest, without naming anyone, the largest anti-tax avoidance case the US government had last year was against an Australian company. We are in it up to our necks Fair enough, they are not breaking the law—as Packer said, you would be a mug if you did not minimise your tax. Let's get the law up-to-date, let's do it as a group of nations, let's not play political games in this chamber about it. Why in God's name do we not have a GST on online trading when online trading is putting retail trading out of business? It does not make any sense.

There is no need to play politics with any of this. It is about preventing the redefinition in the Western world of sovereignty. As I have said to the various officials, if you model out what is happening now and look at the increase in the graph for the take-up of the opportunity, without breaking the law, of not paying tax, we have no capacity in the future to meet the expectations of the electorate, to expect to go to a clean and safe hospital, to have roads that are safe and bridges that do not fall apart, to have a defence force and to have schools. Even though there are some people in this chamber who argue we should not have public schools and public hospitals and we should pay less tax, I think we should pay our fair share of tax and I think the multinational corporate world should be part of that because it is normal behaviour now, as part of the bottom-line profit for a lot of these countries, which adds to their share price, to pay little or no tax. It is just not giving the taxpayers of Australia a fair go. We have to rewrite the legislation and we have to do it as a group of nations because if Australia tried to do it on our own we would be isolated.

Why is it that even our own Future Fund—this is a bit sensitive—has entities in tax havens? Why is it that foreign capital coming into Australia is more patient than Australian capital? It is because of the tax advantages for capital coming into Australia. Our super funds should be investing in the development of Australia but that does not happen because of the return on the capital and because of the tax arrangements for foreign capital. As I say, I need an hour to do this sensibly, without notes because I know it all backwards. We could fix it. Last year it is estimated—it is only an estimate—there was about $3 trillion involved in derivative swaps and tax avoidance to June 30 last year. It is fair to say to the Australian people that as a parliament we want to address this. If we do not address it—as I say, some of the institutional stuff is a bit sensitive—it just becomes a nightmare which will redefine sovereignty.

How do you convince some of the accounting firms who make a living out of giving advice on how to avoid tax that we have to redefine what they have been doing? They will have teams of lobbyists coming to parliament. I had a bloke ring me up and blow the hell out of me this morning because I got a bit of a run in the paper today on this. This should not be about politics; it should be about the national interest; it should be about keeping Australia as the best place in the world to raise a family, breathe fresh air and drink clean water. It should be about the group of the Western developed world being able to provide for its own people as well as look after the wellbeing of some of the less wealthy countries. We can't do that if the $30 trillion—Senator Whish-Wilson, you mentioned 20 trillion—they think it is closer to $30 trillion stacked away. As you are probably aware, the US government is in the process of bringing in a moratorium so they can repatriate some of the capital—a bit like a gun buyback. How do you fix all this? The only way to fix it is for the group of 20 nations to tackle it, but bear in mind that some of that group of 20 are beneficiaries and that sovereignty as we know it cannot continue unless we do.