Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I rise on behalf of the Australia Labor Party to oppose the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015. This bill takes transparency away from the tax system. Transparency matters; it is fundamental to ensuring that all taxpayers get their fair share. It is through high-quality transparency that we can ensure that firms and individuals pay their fair share of tax. Labor will be opposing this bill because this bill would gut Australia's existing tax transparency laws that were put in place by Labor over the opposition of the coalition in 2013. We took this action in government not from some prudent interest in the tax affairs of Australia's largest companies but in response to growing concern that some big firms are not paying their fair share of tax.

It is our understanding that the Australian Taxation Office have prepared the information that would allow them to publish information on the income tax paid by companies earning over $100 million a year, as they are required to do under these transparency measures. However, they are holding off from following through on that legislative requirement and actually publishing that information—as I said, a legislative requirement—because they are waiting on the outcome of a vote in this parliament. I would urge those crossbench senators who are wavering at this point—and urge anyone with influence on crossbench senators to tell them—not to gut tax transparency.

On this matter, I note that in the Senate we have given a notice of motion for an order for the production of documents in the last sitting fortnight. This motion seeks to have the Australian Taxation Office fulfil its reporting obligation as the law currently stands and get this information released before any change to the legislation passes the parliament. Whilst Labor hope that this bill does not pass and that the current legislation remains unamended, we want to ensure that, in the event that the government's proposal is agreed to by the Senate, the Australian Taxation Office still discloses to the parliament the information that it has already prepared under the current statute.

As I noted, the current legislation requires the Commissioner of Taxation to make the information public 'as soon as practicable' after the end of the income year. Because companies have until June of the following year to submit their tax return, this means that the earliest practical date for publication was 1 July 2015, as not all companies have filed them. Labor is concerned that, despite the current legislative requirement to prepare and publish the tax transparency report, the Australian Taxation Office is not progressing this, because the government has indicated its intention to roll back the laws, which it seeks to achieve through the bill we are debating today.

The laws currently apply to about 2,000 of Australia's biggest firms, but this government wants to carve out almost half of the companies affected and all of the private companies affected. These are extremely large firms. We are not talking about small businesses; we are talking about significant firms with a major presence in the Australian market. They represent less than one per cent of all companies doing business in this country. Labor believes it is appropriate to have tax transparency for our biggest firms and that companies should not be able to shield themselves from tax transparency by staying private rather than being public. Labor believes that the threshold should be a revenue threshold, an income threshold, not whether a company is private or public.

I ask: what sort of situation are these laws designed to address? Well, the situation as described by the Australian tax office to the Senate Economics Legislation Committee inquiry on this bill is that one in five private companies earning over $100 million do not pay any tax. That is right: the evidence of the tax collector is that one in five private companies earning over $100 million do not pay any tax. This government should be making scrutiny of large Australian private companies a higher priority.

I commend to the Senate the dissenting report by Labor senators and the Australian Greens to the report of the Senate Economics Legislation Committee on this bill. This dissenting report highlights that many of the arguments being wielded clumsily in defence of this bill are absurd, illogical and often lacking any evidence. It notes that this bill has few supporters and that the government is evidently doing the bidding of a tiny number of very, very wealthy individuals.

There were just a handful of submissions to this inquiry. Other than tax consultants and tax lawyers servicing large private firms, the only corporation to make a contribution was Teys Australia, a privately owned meat-processing joint venture with the American company Cargill, based in Brisbane. I will come to them in a moment.

It is deeply disappointing that this is the first major piece of tax legislation that the government has introduced this year and that this legislation works against minimising multinational tax avoidance. In this parliament, just as they did in the last, coalition members have consistently voted against tax transparency. They voted in 2013 against Labor's package to make multinationals pay their fair share, and now they are moving to gut tax transparency.

When Labor brought forward that bill in 2013, we did so guided by work from the OECD which suggested that Australia's transfer-pricing rules and its anti-avoidance provisions needed to be tightened up to move with some of the sharp accounting practices that some of the world's largest firms were engaged in. The former Assistant Treasurer, David Bradbury, won an award that year for being one of the world's 50 most significant tax reformers. That tax reform award was a credit to the work that Mr Bradbury, along with the former Treasurer, Mr Swan, had done to make sure that Australia's tax laws suited contemporary circumstances. We did that alongside the transparency measures because we know that transparency and reform go together.

In trying to sell this as something other than shielding their mates from public scrutiny, the government have cycled through a series of questionable arguments. Liberal ministers first suggested that we needed to roll back tax transparency because it presented a security risk to the owners of big firms. I note that the Treasury, the Australian tax office, the Attorney-General's Department and the Australian Federal Police all said they had given no such advice that tax transparency generated a security risk for the individuals involved in managing large firms.

As was identified in the dissenting report, there are many criticisms that Labor and Greens senators have of this straw-man logic being used to justify the introduction of this bill. None of it is in poorer taste than the invoking of article 17 of the International Covenant on Civil and Political Rights. Drafted at the United Nations General Assembly in 1966, article 17 of the International Covenant on Civil and Political Rights was drafted to prevent governments arbitrarily or unlawfully invading the privacy of people's homes and bedrooms. It states:

1. No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.

2.Everyone has the right to the protection of the law against such interference or attacks.

In evaluating the limits of the application section 17, the Australian Human Rights Commission observed:

… the protection of privacy is necessarily relative. Balancing the rights to privacy and/or protection of reputation with the rights to freedom of information and expression presents challenges.

In case it needed any further emphasis, the committee report clarifies that both the Senate Standing Committee for the Scrutiny of Bills, and the Parliamentary Committee on Human Rights scrutinised the bill and found no evidence that any human rights would be violated. Labor Senators and the Australian Greens senators rightly objected to the invocation of section 17 of the International Covenant on Civil and Political Rights in the strongest possible terms. As the dissenting report said, invoking this instrument is an obnoxious attempt to misguide the public, the press, and the parliament. It has no connection to tax privacy, and the claim deserves both derision and ridicule.

Another argument suggested by the government was that tax secrecy was fundamental to the integrity of our system. They said that such laws reveal too much information about companies. I agree that confidentiality is an important principle for individual taxpayers and for many businesses. But you have to balance privacy with the public interest. If you are turning over $100 million a year, you are among the most successful firms in Australia. So there is a legitimate public interest in knowing whether firms like these are paying their fair share. The Senate inquiry into multinational tax avoidance heard evidence about some companies paying effective tax rates of two per cent or less. These laws make public basic details about the total income, taxable income and tax paid by big firms so that we can better understand the contribution they are really making to Australia.

Further, much of the information required to be disclosed is already public. As noted in the chair's draft, under the existing provisions of section 3C(3) of the Taxation Administration Act 1953, the Australian Taxation Office will be required to publish the following basic information about large privately owned Australian corporations with revenue in excess of $100 million: firstly, their Australian Business Number; secondly, their total income; thirdly, their taxable income or net income; and, finally, if any income tax is payable. Much of this information is already a matter of public record, and its availability will not be affected by the introduction of this bill. The public can easily find a corporation's Australian Business Number by searching the Australian Business Register. Teys also published theirs—38 009 872 600–in a privacy policy document on their own website.

Apart for some minor exceptions, all Australian corporations must provide copies of their financial reports to the Australian Securities and Investments Commission. The public can access a wide range of often detailed personal and financial information, including copies of documents lodged with Australian Securities and Investments Commission. Financial reports can be purchased by the public, their competitors, nosey senators, or any other interested party. A copy of Teys' 2014 financial report, which was included as an appendix to the dissenting report, informs us that Teys' total income in 2014 was $52,161,000, its net income was a loss of $7,925,000 and its income tax payable was $14,881,000.

Labor Senators and the Australian Greens sensibly rejected the ridiculous arguments the government is mustering to conceal this information. Firstly, an individual's right to privacy of their income and tax information remains preserved under current legislation. Private corporations with revenue in excess of $100 million and a single shareholder are not subject to current disclosure requirements. Corporations do not enjoy the rights and privileges of natural people. It is important to note with respect to any allegations that privacy would be violated that the name and address of any current or past company directors are already available from the Australian Securities and Investments Commission.

Most recently the government has raised the spectre of big supermarkets like Coles and Woolworths squeezing their suppliers in business negotiations if they are able to find out the total income and tax paid by a firm. But does anyone really believe that these large firms do not already have access to detailed financial information about the firms they buy from? It is possible to look up one of several dozen online business databases right now and see the annual revenue of dozens of Australian food manufacturers, and it is highly likely that the big supermarkets have access to far better sources of industry information than that basic information.

Tax transparency matters because, without it, we have no way of knowing if big companies are paying their fair share. There are plenty of big firms that pay their fair share, and their contribution deserves acknowledgement. But, more importantly, it is clear that some firms do not. When companies are paying tax at a fraction of the standard rate, Australians should ask why.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Why do you hate business?

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

Senator Edwards.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

At a time when the government is floating plans to raise the rate of the goods and services tax, we should look closely at whether all taxpayers are making their fair contribution.

We will not be able to do that if this government gets its way on replacing transparency with secrecy. The consequence is that some companies will be able to get away with ducking their taxes. Every single dollar that gets sent offshore or minimised with a handy loophole is another dollar that cannot be spent on things that matter—things like hospitals, schools and a liveable pension, which have been under sustained attack from the government's budget cuts.

If the government had its priorities right, it would be delivering policies that stop companies shirking their tax. It would be building on the good work engaged in by Mr Swan and Mr Bradbury, on multinational tax avoidance. Those were important reforms for bolstering the Australian tax system, for broadening the base with the possibility that we might ultimately be able to lower the rate.

Labor's multinational tax package was produced in the first half of the parliamentary term. It adds $7.2 billion to the budget bottom lines over the course of the next decade, but the Treasurer does not want a bar of it. He has had the option on the table since Labor announced our package in March. We are happy to sit down with his officials and work through how it can be implemented. It is a great Labor idea, and it is there to be stolen if the government is willing to step up to the plate on multinational tax avoidance. I do not know why this government is too stubborn to acknowledge a good tax idea when it sees it, but we do know that the issues that Labor's package goes to are important ones.

We know that some big companies are transferring money into their Australian arms and dressing it up as a loan when it is really shifting money from one pocket to the other. We know that the problem of using debt to shift profits is a serious one. That is why Labor is proposing moving from the current system, which allows firms to pick their favourite debt deduction rule, to getting rid of the two debt deduction rules that lack economic sense and sticking with the one that does have economic sense: the worldwide gearing ratio. That would allow firms to claim for their Australian operation the average amount of debt they owe to banks around the world. If your multinational group owes a lot to the banks, it can claim a lot back in tax deductions. If it does not owe the banks a cent and instead is just engaging in internal loans, it cannot claim subsidies from the Australian taxpayer—those subsidies which are underpinned by all Australian taxpayers.

The current tax transparency laws, which the Australian Taxation Office will hopefully soon begin to implement, help us hold firms accountable. They help us policymakers and the broader community see where there are problems that need fixing to create a fairer tax system. But, when Labor tries to make sure that we get good information out in the public domain, the government stand on the side of secrecy. They care far more for the feelings of a handful of big companies than they do for making sure that we have a strong tax system without loopholes.

Frankly there has been a disconnect between the rhetoric that has been spoken of by this government, by the former Treasurer, and the reality of the legislation we have seen to date. While the rhetoric has been so strong, the actions of the government have been disappointing; and this legislation is another part of that long line of disappointing action.

The Turnbull government wants to project an image of change. But, if the Turnbull government does not want to be known as a government which stands up for a handful of megarich against regular Australians, then it should cease this attempt to gut tax transparency laws. To pursue this bill is to stand up for the secrecy of large firms against the public interest.

I urge the government to withdraw this bill and to keep the current tax transparency laws in place. If they do not, we will continue to call them out for their duplicity every step of the way to the next election. We call on those community groups who care about multinational tax fairness and about tax transparency to join us in a conversation with the Australian people about this bad, terrible and harmful legislation.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Now we are all out of our misery. What a report on what could possibly be wrong. Where do we start? Is this the politics of envy? Is this the politics of inequity? Fair suck of the sauce bottle! Really and truly! Is there a suggestion from Senator Dastyari that everybody that has a turnover of less than $100 million is fully compliant and those over $100 million are not going to be compliant unless their full financials are published? Spare me!

What we are hearing in the contribution from Senator Dastyari is outrageous. It assumes that Chris Jordan, the Commissioner of Taxation in this country, cannot possibly do his job unless all private companies with a turnover in excess of $100 million have their full details—and all of their commercial transactions and effectively the insides of their businesses operations—exposed publicly. That is completely outrageous. It assumes that unless everything is published, we—'nosey senators' as I think he has referred to in the dissenting report—are the only ones who can find out all these wicked people in private enterprise.

The basic tenet of taxation and the application of paying tax and the relationship between the tax commissioner and any company—public or private or an individual—is one in which confidentiality prevails. It is a tenet which is sacrosanct.

The contribution we have just heard is not just outrageous. And I mention the word outrageous because we heard some other outrageous comments earlier. He made some reference to Prime Minister Turnbull earlier, about where his business affairs are domiciled. I can assure you that some junior woodchuck, ex of Sussex Street—

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Is that me?

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

would probably do well to err on the side of caution with reference to what he brings to this privileged House, with no capacity to render any legal support for the position that they take, because I would suspect that the Prime Minister in his dealings—being who he is and what he is and of the character he is—would have all of his tax paid here in this country.

Once again the inference from Labor is that, unless everything is publicised—come back, Senator Dastyari! Through you, Mr Acting Deputy President: come back. Come back and listen to this! I had to listen to you talking about your dissenting report for 20 minutes.

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

Senator Dastyari, you have a point of order?

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I would appreciate it if the—

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

Your point of order?

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Yes, earlier the senator did not refer to me by my proper title. I would appreciate it if he referred to me as 'Senator Dastyari' while I go back to the hearing of the Senate economics committee that I am chairing.

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

Sorry, I missed that point of order, Senator Dastyari. If I had known that Senator Edwards referred to you like that, I would have pulled him up, I assure you.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I am sure I did not. If I had really been thinking about it, I would have said, 'Newly Appointed Parliamentary Secretary to Save the World' because of all the work he has been doing in the economics committee. I must say that when they do eventually take him from that committee I will miss the theatre, the theatrics and the bashings of all of those that really cannot fight back. I am very sure that the economic secretariat will not at all miss the workload of the 14 inquiries that we have in trying to pursue this politics of envy that the Labor Party seems to be hell-bent on.

I submit that Labor's income tax public disclosure laws required the Commissioner of Taxation to publish the name, the address, the business number, the total income, the taxable income and tax payable of companies with a total income of $100 million or more—we know that. Every company that operates in Australia, whether private, public or multinational, is expected to meet their tax obligations with the tax commissioner. Whether it is public or not makes no difference—not one whirly bit of difference. They have to comply. As I said, the confidentiality cannot be unbroken. They should be able to rely on that.

Let us take an example in the wine industry, in which I am a participant. Sadly, I do not have my details published, because I do not reach $100 million in revenue, but I do know companies that do. It is a highly competitive environment which you have heard about in the contribution of the politics of envy that we have just heard from Senator Dastyari. He has indeed defined Coles and Woolworths as a duopoly that we have in this country. Perfect. If you are a wine company and you are in excess of $100 million, all of your private financials are provided to them via the tax office under this disclosure law. It is not very difficult for the people you supply to, your competitors and the people that are looking to supply. Take the wine which you produce and your competitor wants to take that off the duopoly shelves. It is very easy for them to start working out what their volumes are from the market information they get from supermarkets. It is very easy to start working out how much you are selling. Why should there be a disadvantage in going over $100 million in revenue? Why should they be disadvantaged from the person that only makes $95 million, who does not have to disclose all of their information? This is discriminatory and this bill addresses it.

There is much said about how this was colloquially known around the halls here as the 'kidnapping.' The reason it was known as the kidnapping act is there were people who were quite rightly genuinely concerned that the companies that they have built—and they have never listed them publicly—would be subject to scrutiny from crime gangs, from people who would look to extort. This is not unusual. These are not terribly sophisticated people, but why would you hand all this information to them? Some people might think that is bah humbug. We live in a relatively safe country in terms of commercial issues which may arise. But there are examples in history in developed countries where people have been kidnapped for a ransom. Those are the issues. That has been raised. Whether you agree with it or not, it has been raised, and we are here to represent those people who are contributing to the debate.

If unamended, this legislation presents the whole taxpayer system as it was under Labor's laws, where the ATO was compelled to list the taxable income, so that now differentiates. I have had to do this a few times in inquiries: identify the revenue, identify the taxable income—which then, obviously, extracts the costs and gross profit and then provides transparency not to the tax commissioner but to your competitors and to the people that you sell to.

I will give you some idea of what several Labor members have highlighted previously yet failed to apply in these circumstances. Bill Shorten, the Leader of the Opposition in the other place, said:

The inconsistencies and ambiguities associated with the existing law have the potential to undermine its primary purpose—that is, to provide clear protection for taxpayer information. The taxation law has long recognised that such protection is fundamental to ensuring that taxpayers maintain their confidence in the operation of the tax system.

This is Senator Dastyari's mate, the fellow that just gave him his most recent promotion, and he is shrilly in here talking about what is good for the nation. Yet his boss, the Leader of the Opposition, Mr Shorten, is somewhat at variance to that.

I will go on to quote the Shadow Treasurer, Mr Chris Bowen, who said:

The Government affirms the importance of maintaining a high level of protection of information provided by taxpayers.

We have got one more from Mr Swan. I think he was dubbed—quite ironically now in light of what he left this government with to clean-up. Mr Swan is quoted as saying in his time:

I would have thought that everyone out there that was concerned about good public administration would see the common sense in observing what the Tax Office says about confidentiality provisions because they are important to every Australian and it's not a decision of the government, it's the decision of the Tax Office.

What we are seeing playing out here is the politics of envy.

I have talked about the safety risks; now I will look at reputation. The CEO of Godfrey Hirst Australia, Australia's largest carpet manufacturer, noted:

By publishing extremely limited information selected specifically to put the targeted taxpayers in the worst possible light, it invites (incites) public action against the target taxpayers and potentially those associated with them. There are national and international examples of such actions against companies involving physical damage, reputational damage and commercial boycotts.

Why would we want that in this country? We do not want businesses boycotted in this country; why would we want to prejudice businesses in this country? Why aren't we unbridling people? Why would we say to people, 'Don't go above $100 million in turnover because your tax affairs will become known by your competitors and the people you supply to—rough elements and so on—and you will lose your competitive advantage and, therefore, any international company that is looking to compete with you in that space is going to know everything about you but you are not going to know anything about them'? In other countries they do not have anything that is as prejudicial to private individuals as this is.

For public companies—that is why they go public. They have to report every six months, they have to say whether or not they are going to give a dividend, they have a continuous disclosure obligation, their shareholders need to be able to reach in at any point in time and understand. Why is that an imperative for them, to publicise their accounts and their reports? Because they are listed in the equities market, on the stock exchange, or they have multiple stock exchange listings—like BHP and Rio Tinto do. That is in the public interest. They are massive companies with tens of billions of dollars' worth of capital value. And obviously, as a basic tenet of the equities market, you need to know that these companies are compliant. Not so for a meatworks, a mid-west New South Wales wine company that happens to be very successful, a Barossa wine company, or a whisky distiller that has done very well and has had exponential growth. Why do they have to? There is no need; they are private companies. They have not got any public money. They have not got any faceless investors. They are doing what they are supposed to be doing, and it is what we should be encouraging in this country—not telling people to 'just grow your revenue to $99.999 million and don't go over it, because then everybody gets a look into your business.'

A similar disclosure regime was abandoned in Japan after 2005 after a recommendation from the Japanese tax advisory commission, which found that there were 'various reports of the disclosure being a factor in causing crimes and harassment'. I am not making this up. This is what the Japanese tax advisory commission said. And they abandoned it. They got rid of it. They did not wax lyrical about the politics of envy and say that everybody who generates over $100 million must be known'. Senator Dastyari—the newly-promoted shadow parliamentary secretary for saving the world—made all these references about 'if you don't publish the results, those people are cheats.' That was the inference. That is what was being said: 'unless we publish everything above $100 million they will cheat.' That is outrageous. That is not the case at all. That is vilifying good people in this country who have good businesses. So everybody who has revenue under $100 million is okay. They are fine. They are good, honest people. Anybody with over $100 million is not. That is the inference. Japan abandoned it, and the fact that the Labor shadow ministry points to the publication of the BRW rich list as evidence that this information is already in the public domain is an insight into its complete disconnect from business. That is where Labor gets their inspiration for identifying who is on their politics of envy hit list. It is just not on.

In opposing the passage of this bill, Labor is tinkering at the edges of an ideological folly to attack the rich. It achieves nothing of its stated objectives to ensure companies pay their rightful taxes. All it means is that busybody, nosey senators can take cheap shots whenever they like because they can just dial it up on the internet. It is not on.

I note that the Commissioner of Taxation says that the vast majority of Australian companies are paying the right amount of tax, and I know that, in the inquiries that we have been conducting in the Economics committee, I trust the information that I have got about what the tax commissioner is doing. The number of people on his watch list has gone from 30 to 86. These are big Australians. They are not on the watch list because he suspects that they are doing anything wrong; it is just they are big, complex companies in multinational jurisdictions and those companies are, in the main, working with him to ensure that they pay the right tax.

So the suggestion that everybody above $100 million is delinquent and less publicised serves no purpose at all. It raises not one more cent in taxation. All it does is cause pain and suffering to those people looking to build their business in anonymity—which is what everybody below $100 million can do—to grow and to aspire to be great Australian companies which can go out and forge a path around the world. They are looking to grow their businesses beyond that without all of the commercial disadvantage of having the inside measurements of their commercial underwear up for show for everybody around the world to look at.

I suggest that the Labor Party have a look at their politics of envy because that is how it is being seen widely amongst the business community. They should have a look at how they reconnect and restore their reputation from this ridiculous, intransient position that they are taking on this bill. I urge them to reconsider their dissent with regard to it.

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

Before I go to my more formal remarks I will just make a few comments on that contribution we had from Senator Edwards. Those three-word slogans that they are full of: we have had a gutful of them across the country for far too long. We are supposed to be entering a new and enlightened age under the great messiah, the new leader of the government. Now we have this new three-word slogan, the 'politics of envy'. What a con! What a con he is attempting there. What we are talking about here is the politics of fairness—

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

What rot! You are calling everybody crooks!

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

It is something that those on the other side simply do not seem to understand. There is nothing envious about a community wanting to have quality infrastructure, such as a hospital to which they can go when they are sick. There is nothing envious about a community seeking investment in infrastructure so that they can move around freely, have successful businesses, do business and trade, grow jobs, grow our economy and then go home to their family in a reasonable time. There is nothing envious about that. It is about a call for fairness and a fair distribution of opportunity for every single Australian.

But what we see on the other side there is a group of people who are happy to pull down the shutters, to do little deals on the inside with their insider mates, to prop up their own perverted sense of advantage and to shut out the rest of Australia. All of the other workers and all of the other businesses—small, medium and large—do the right thing. They pay a fair share of tax and make a contribution to the country, which is a very significant thing. Those opposite just do not want people who are making an awful lot of money to have to reveal anything of the truth of their earnings to this country and pay their fair share.

Then we have the other fake argument—the 'privacy' argument, that people who earn that much money should be entitled to their privacy. People who are earning $30,000 in the seat of Robertson on the Central Coast could say they need to be able to have their privacy, too, and that the Taxation Office should not look into their affairs. The reality is—

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Why do you hate wealthy people who pay a lot of tax?

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

The senator has the right to be heard in silence!

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

Thank you very much, Madam Acting Deputy President. I will actually put on the record how difficult it was for me to exercise personal discipline—to sit there and listen to the nonsense that I heard spewing forth for 20 minutes. There was no substance to it. It was just a recitation of a few lines that I expect we are going to hear over and over—the speaking notes that they have been given. Anybody who actually cared about this country and anybody who actually believed in fairness would never stand up and make the speech that Senator Edwards has just made. His is a politics of advantage for the few at the cost of the very many.

The argument about privacy is just a load of nonsense. People who make an awful lot of money generally show up on the BRW Rich List. It is not a secret, and they are probably not living in a very modest way either; I am sure that there are a few accoutrements of gathering wealth. And there is nothing wrong with that, but the argument is that you should have privacy because you are wealthy! Privacy for the wealthy and scrutiny for the poor—that is not the sort of country we live in and that is not what Australians think. If it is good enough for the workers who take home a very small pay, if it is good enough for the small businesses who might turn over $2 million or $3 million a year and pay their workers a fair and decent wage—a safe wage—in accordance with the law and if it is good enough for small businesses to fill in their BAS statements every four months, ever since John Howard made that a growth industry, it is good enough for those who have lots and lots of money to probably pay somebody to do it for them.

It is about fairness, it is about equity and it is about a level playing field for every Australian. That is the kind of Australia I believe in. That is the kind of party Labor is, because we stand up for those values and those principles. We will always stand up for fairness. We do that because we need to have a fair and equitable taxation system where everybody puts in their bit relative to what they can pay, because with that money we can plan for a great future for this nation. We can plan a great future for the children who are born into excessively, exceedingly and wonderfully wealthy families, and a great future for children who were not so—I do not know if I want to call it 'lucky', but those who did not land with those parents. Children of talent and capacity—whether they are creative, whether they are going to be our engineers or our science graduates, or our musicians, dancers and storytellers, or our carers, teachers, mechanics and plumbers—whatever they are going to be, they need to get a great education. That is what the tax dollars that Australians put in build for Australia. That is what we do; we make that happen. But this lot—this government—are committed to making this an unequal, unfair country, and this piece of legislation characterises that attitude.

Let us just go over a few of the facts with regard to this bill that is before us—the Taxation and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015. The title itself just leaves me weak at the knees with its gross misrepresentation. It is hardly 'better targeting'; it is about getting a particular group off the radar.

The reality is that in 2013 it was Labor that passed legislation that required the tax commissioner to publish the taxable income of, and the income tax payable by, all companies who had an annual turnover of $100 million or more. They might not be listed companies but they are doing a fair bit of business in Australia; there is no reason they should not be subject to scrutiny in the way that any pay-as-you-go earner is. Senators will remember that we did achieve the passage of that legislation and that degree of scrutiny, against a background of incredibly fierce and unrelenting opposition from the coalition, who were then in opposition and are now in government. Labor's aim then remains our aim today—to ensure that some of Australia's largest multinational corporations and companies pay their fair share of tax.

The current system covers about 2,000 of Australia's largest companies. The bill before us seeks to ransack and emasculate the legislation by removing Australian owned private companies from the disclosure of taxpayer information. Currently, such companies make up almost 50 per cent of those affected. The government have a shameful reputation for stifling transparency, and this is but one more example of that. Labor's position, in contrast, could not be clearer. By moving ahead with their irrational plan to gut Labor's tax transparency laws, the government have illustrated yet again how little they care about the fact that too many large corporations simply do not pay a fair and reasonable rate of tax. I refer to paragraph 1.3 in the dissenting report put forward by the hardworking senators who advanced this for us:

1.3 The ATO gave evidence during this inquiry that one in five private companies earning over $100 million do not pay any tax. This government should be making scrutiny of large Australian private companies a higher priority.

They are making it a high priority all right—they are making it a high priority to get them off the radar so they are never subject to any sort of scrutiny at all.

When I look around the community that I live and work in and I see small business people who work hard and create jobs in my community, when I see students that I taught who are now running businesses and bringing up their own children in that community, I know they are working and contributing and paying a fair share of tax. Not one of the people that I know would be in a position to say that they are not paying any tax. This is the fact. That is why the piece of legislation that Labor introduced was so important and why what this government is trying to do with this legislation—the emasculation of it—is so shameful.

Of course, there are many firms, ethical businesses, that have a view to the future, that are sustainable and that will understand reputational damage from doing the wrong thing. Those that do the wrong thing can run but they cannot hide. In the end they will be picked up. Good companies that believe in doing the right thing, that grow jobs, are a part of this nation. But we are not talking about them. They are not the ones who will be upset about the legislation as it exists. This is a cover for companies who are doing the wrong thing, who are hiding profits, who are doing whatever they can to avoid paying their fair share of tax, to a point where they are not paying any tax at all. That is who this government wants to unleash. That is what this bill is about. It has lots of words, lots of pages, lots of terms that are appropriate for a parliament. In a nutshell, this is about letting off people who do not pay any tax, who do not want to pay any tax, and making it possible for them to do that shameful thing. Of course there are firms who do pay, but it is equally clear that some do not. We know this to be true.

At the hearing into the tax transparency amendment bill, evidence was given that, in 2014, 22 per cent of privately owned companies with revenue in excess of $100 million paid no tax. It is simply unfair, unconscionable and unacceptable, and the wider community have a right to express their real and legitimate concern. Unlike this government, Labor believes in more transparency, not cover-ups. The current tax transparency law helps hold firms accountable. In contrast, what is crystal clear is that this government denies public scrutiny and believes in hiding from the Australian public information about how much these companies actually pay.

Time and time again we have heard the same tired, cliche-ridden rhetoric from the government about their commitment to tackling multinational tax avoidance, when this legislation does exactly the opposite by ensuring there is less transparency, not more. They say to the Australian people, 'We'll make sure these big multinational companies that get featured on programs over a period of time pay their fair share,' and then, when they think no-one is looking, when they think they are really smart and they can pull the wool over the eyes of the Australian population, they put forward a piece of legislation like this and whip away any scrutiny. Put this alongside their decision to reopen offshore loopholes, which is worth $1.1 billion, and you have a pretty clear road map of where the government's taxation priorities lie. It is not with fairness and it is not with the expectations of the Australian population; it is with their top-end-of-town mates and with people who do not want scrutiny, who think they are above and beyond.

What is so insidious about this legislation is the way in which the government has struggled to justify why it might be necessary. I did make commentary particularly on Senator Edwards's presentation here this afternoon. Some of the explanations presented in defence of this legislation are facile and risible, containing not a single shred of evidence to support them, but are an absolute revelation of ideology, of advantaging the few, of keeping their rich mates out of the Australian taxation system. For example, suggestions that publishing the information would represent a security risk—which is one of the arguments I have heard—have been absolutely rebutted not only by common sense amongst Australians but by the Australian Federal Police, who think it is a joke, by the Australian Taxation Office, by Treasury and, indeed, by the Attorney-General's own office. So any claim of security risks around making these wealthy individuals subject to scrutiny is simply a misrepresentation of reality.

What evidence is there to suggest that out there in the community people are writing to their MPs and demonstrating their outrage at the idea that some of the largest multinational corporations should actually be open and transparent about the amount of tax they pay? I have not had any letters telling me that they want less scrutiny. I am waiting for the campaign. I do not think GetUp! are going to run it. I cannot see thousands of emails coming across my desk saying, 'Give those multinational corporations a break. Let them loose. They've been doing it too hard. They have not been paying any tax for so long now. We really have to look after them; they are stressed.' I do not expect that sort of a campaign. I certainly have not received one so far.

While we might joke about how ridiculous the proposition is that underpins this bill, it is really a very serious issue. A fair, competitive and sustainable taxation system is absolutely vital for the future prosperity of this nation. Tax avoidance weakens and impoverishes our society. It exacerbates inequality. It is unfair. It is unacceptable. Yet it is being given support by those opposite and this piece of legislation. This is a very live issue of immediate concern to the millions of Australians and their families who pay their own taxes and then rely upon the revenue raised through them to fund schools, to fund hospitals, to fund pensions and support people, to provide great infrastructure and to build and sustain communities in a myriad of ways. It takes money to buy things that matter for our community.

Just last week I was able to go to the Cancer Centre on the Central Coast at Gosford Hospital. When I was saying 'I was able to go to', I am glad that I do not have to go there to seek treatment. But, frankly, the hoops that I had to jump through with the New South Wales government to be actually allowed to go into that place are a little bit interesting. There is no openness; it is about keep out of the hospital people they do not want there. It is about controlling the environment, just like those opposite are trying to do for their mates—control the environment so their mates do not have to pay tax. Nonetheless, I was at one of the 26 regional hospital cancer centres that were delivered by the last government, the Labor government. We saw inequality across this country in terms of health outcomes, and the taxation dollars of good hardworking Australians went across this nation to make equitable access to healthcare possible for people and their families suffering illness.

These multinational companies that are earning these enormous amounts of money and do not want scrutiny might be able to afford to pay for their treatment in different places, but for most Australians access to a public hospital and access to a cancer centre when they need it is their only option. They are never going to be able to buy a wing and set it up off the side of a private hospital. They are going to need a public health system. That is what they get when people pay a fair amount of tax. It makes the building of our nation possible. It makes access and equity possible. But this legislation is anti-equity. This is anti-access. This is anti-Australian. It offends every value that decent hardworking Australians own.

I do not divide business and workers. Workers work in businesses and businesses that are ethical employers are sustainable businesses and workers come and they own those businesses. That is exactly how it is happening in the regions right around this country. Good people who pay their fair share are the ones who are going to miss out if this government gets this piece of legislation through. There can be no logical reason that the government have introduced this legislation other than to look after their mates at the big end of town and to avoid the public backlash that would emerge if it was found out that some corporations pay almost no tax. That is what we are doing today: reminding people that some corporations pay almost no tax.

What makes this legislation even more galling to those of us on this side who are committed to openness and clarity on this issue is that it is being introduced at the very time that, as a consequence of two disastrous budgets, more and more Australians are struggling and finding it even harder—under this arrogant Liberal-National coalition—to make ends meet and to cope with the pressures of everyday life. School funding has been cut by $30 billion. Health has been cut by $57 billion. They cut and they cut, but they are happy to cut and run and leave a spot for their mates to bask in the sun in the glory of their millions and pay on tax. They will keep the rich making that money in an excessive and obscene way and take money from those who have the least.

Clearly there needs to be a balance struck between privacy and what is in the public interest, but this government is afraid of any scrutiny at all. It was Labor who, in 2013, in the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill, plugged loopholes in Australia's transfer pricing rules and anti-avoidance provisions. It was Labor that signed 28 bilateral information sharing agreements. In March this year Labor announced a package of measures that would result in $7.2 billion of tax coming to Australia during the course of the coming decade. This legislation would interrupt that. (Time expired)

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

This government said that it was too busy dealing with other legislative priorities to bring forward a vote on same-sex marriage. It is interesting to contemplate then why it is prepared to dedicate time in this chamber and the other place to unwinding a popular piece of legislation that lets Australians see how much tax business is paying. The answer is hidden in the explanatory memorandum to this bill, the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015, and it pays to review the reasons that are set out there. Reason No. 1 is that it 'ensures that the public disclosure of information by the Commissioner of Taxation under the income tax transparency laws does not affect the privacy and personal security of the ultimate owners of Australian-owned private companies'. Let's turn to privacy. This is clearly not a genuine reason for this to be pursued in this way. Information about the value abut these companies—companies worth more than $100 million—is publicly available on databases like IBIS. I heard Senator Edwards remark that the BRW Rich List might be the source of Labor's information on this. I have never read that but I can tell you that IBIS routinely publishes very detailed information about the affairs of companies and individuals associated with them, and the value of their assets. It is also willingly disclosed by many of these people to BRW, although Senator Edwards clearly sees this as a complete waste of reader's time.

Personal security is also referred to in this reason and, as we learned in the legislative hearings for this bill, there has been absolutely no advice provided by the AFP that kidnapping is a risk in relation to the publication of this tax information. There has not been to my knowledge a spate of kidnappings exposed in the newspapers—I have not read anything about that. In any event, wannabe kidnappers do not need to review information that is provided by the Commissioner of Taxation and traced through the beneficial ownership back to particular individuals to work out who is wealthy and who is not. We have a growing gap in this country between the haves and the have-nots. It is fairly obvious who is wealthy and who is not.

Reason No. 2 in the explanatory memorandum says that it 'removes the risk that such disclosure of the information will harm Australian owned private companies' market environments'. This argument about competition is not a genuine reason to proceed with the measures in this bill. This bill in fact levels the playing field between the publicly listed companies whose financial reporting gives a much clearer picture of the risks related to those companies and the private companies whose lack of reporting may conceal the true risks associated with that company.

Reason No. 3:

These amendments will reduce the compliance costs imposed on Australian-owned private companies.

Again, really, compliance costs are a genuine reason? We cannot be serious about this. Compliance costs are always a question of proportionality and balance. If there are costs associated with this and there is a public good, then reasonable compliance costs should be borne by the business.

But, finally, in reason No. 4, we come to the real reason that this bill is being brought forward:

The amendments will reduce the need for such private companies to correct probable misinterpretation of the information and to manage reputational risk.

This really lays it bare, doesn't it? There are some companies out there, not all by any means, that are paying an amount of tax that the community, if it knew about it, would think was unfair. The disclosure of that, quite probably, as outlined in the memorandum would lead to reputational risk—more properly described perhaps as complete outrage about the situation that sees some of these companies contribute very, very little to our national outcomes.

The explanatory memorandum acknowledges that misinterpretation is not only possible but probable. What is really happening here is that people who are determined to conceal some outrageous propositions have leaned on the Liberal Party to do their work in this place. Because the truth is that, although most companies—and it is most companies—try to pay their fair share of tax, there are some companies that take aggressive steps to minimise the amount of tax that they pay in Australia. There are some companies that are in legally grey areas, so the ATO has publicly stated that privately owned corporate groups, often controlled by a wealthy individual or family, pose tax compliance risks. These are the very companies that this government is trying to exempt from scrutiny.

We know that the ATO is negotiating with some large multinational companies to unwind dubious tax structures that have seen hundreds of millions of dollars expatriated in questionable circumstances. The Senate committee has reported on the dangers posed by base erosion of profit shifting—multinational companies taking advantage of their global organisational structure in order to shift profits from where they were actually earned into low-tax jurisdictions. There is no doubt that some of these tax structures are strictly illegal; however, they produce outcomes that most Australians would not think fair.

I want to recognise the very important work that has been done by the Tax Justice Network in highlighting the tax practices of Australian and multinational corporates. They gave evidence to the legislative committee, which indicated that nearly one-third of ASX listed companies have an average effective tax rate of less than 10 per cent; and 26 per cent of Australian headquartered companies with over $100 million in income paid no tax. Private companies linked to Australian high-wealth individuals have average profit margins lower than other categories of companies. Almost two-thirds have some form of international related party dealings—and these companies amount for most of the international party dealings reported to the ATO, despite being only 21 per cent of the business caught under the relevant provisions of the legislation. Not all of these companies are going to be in breach of the law and not all of these companies are going to be engaged in aggressive tax minimisation. But there are signs that there is a problem that would benefit enormously from the scrutiny under daylight.

The Institute of Public Affairs submitted to the Senate inquiry that there is nothing wrong with an individual or company structuring their affairs to pay the minimum legal amount of tax—I beg to differ. If that were actually true, then there would not be any reputational risk from the public finding out how little tax some companies pay. The truth is that most companies are interested in being good corporate citizens, and part of that involves paying a fair share of tax. This is because tax supports the systems that those companies need to continue to do their business and generate profits.

The tax raised pays for schools and universities that educate the workers that these businesses need. It pays for blue-sky research that produces innovation that products build on—things like the CSIRO's invention of wi-fi. It pays for the security and safety that allows customers to feel safe buying and using high-end electronic products like the phones most us carry around—secure that it is not going to be nicked by a violent offender, because we have got very good law and justice systems in this country. It pays for welfare protections that give workers some comfort—to be able to take on the flexible working conditions that many of these companies demand—in the knowledge that is if there is a difficult adjustment between jobs, then there is some sort of support system that those workers can fall back on. These are all critical elements of running a successful business in this country and it is why this country remains a place where business wants to invest. The companies who are employing aggressive tax minimisation strategies know that this is true. They know that these are things that are valued by the public and they know that they would face significant public pressure to pay more tax if the amount that they were paying was made public.

It misses the point to say that these strategies are legal. There are plenty of things that are legal that are not right. It is legal to walk past someone who has fallen down and hurt themselves, but the fact that it is legal does not make it right. If you do something like that you cannot complain if the people around you rightly call you out on your actions. That is what the measures introduced by Labor, to provide for some level of tax transparency for large companies, do. They let Australians call out the behaviour of companies who have chosen to walk past rather than help out.

We have heard that Australia has a budget crisis repeated a lot in the last few years. This government has suggested that everyone is going to need to make sacrifices in order to return to surplus, although in the measures that were introduced in successive budgets it become very clear that when they said 'everyone' they really just meant 'working-class and middle-class families'. Australians, in this context, have a right to know—if we can borrow the former Treasurer's words—whether companies are lifting or leaning. The companies out there that are doing the right thing, who are paying the right amount of tax, have a right to know whether their competitors are lifting or leaning. ACOSS has calculated that $1 billion a year in revenue would be gained if the use of private companies to avoid income tax was curbed.

There is a significant public interest in our current budgetary context in making this information available and in putting it in the public domain. The government has said that it is worried that if information is disclosed it will be misinterpreted. We know that this is not true. The government is not worried that the Australian people will not understand; they are worried that the Australian people will understand. They are worried that the Australian people will understand all too well and that they will demand explanations. If people and companies want to use contrived structures to minimise their tax to avoid tax, then they should be prepared to defend their decisions.

As Australians, we have high expectations about the services that we can receive from government. My colleague Senator O'Neill talked about those. People expect high standards of health, people expect a decent education, people expect to be looked after in retirement as a reward for many years of hard work and service in the community, and people expect to be able to access justice when they need it. Australians also understand that if we want these services we need to take responsibility for raising the revenue to pay for them. We need to have a national conversation about how best to do this, but the precondition for any such conversation is a belief that everyone is contributing. There would be nothing more corrosive to this conversation than the perception that things are not fair. Unfortunately, there is a widespread perception at the moment that the system, as it currently operates, is not fair. Not just the tax system, but the entire system by which decisions are made and by which we order our affairs.

Debate interrupted.