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

Let me begin by just saying that multinational tax avoidance is not a victimless act. Every dollar that is avoided, every dollar that is minimised, is a dollar that is not going to our schools, to our hospitals, to our social services that rely on this funding.

Senator Canavan interjecting—

And, Senator Canavan, it concerns me. It concerns me greatly that there are a handful of international and multinational companies who are behaving in such a way that is bringing this burden upon all of us.

The former Treasurer should be congratulated for saying and doing many good things in this policy area. The former Treasurer Joe Hockey, with this bill that we are here to debate tonight, the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015, actually went a very important step in the right direction. This is a bill that fundamentally addresses many important concerns around multinational tax avoidance. Does the bill go far enough? Frankly, I do not believe it does. Can the bill be improved? Yes. Is this the answer to our multinational tax problems? No, I do not believe so. That being said, I do believe it is an important bill. I believe it is a bill that should be supported. I think it is a bill that demonstrates the right intentions. Even though it is not a bill that encapsulates everything that I would like to see in a multinational tax avoidance bill, that does not mean it is a bill that should not be supported.

Labor's position is that we support this bill. We have been calling for more action on multinational tax for over two years. It is good to see that the government has actually come on board with this legislation. Let us be clear: there is an international process currently underway through the OECD BEPS Project, the Base Erosion and Profit Shifting Project. This bill will complement that process. I anticipate that, in coming months, we are going to see some additional legislation. I anticipate that we are going to see new bills come before this parliament to encapsulate and capture everything that is being proposed via those changes. But, in the meantime, we can and should take unilateral action. That is fundamentally what this bill advocates. Labor is not going to stand in the way of attempts to tighten Australia's tax net, despite the fact that we believe that this legislation is an inefficient and insufficient attempt at addressing those concerns. Labor will continue to take a constructive, open and helpful approach to protecting Australia's revenue base. In the same spirit, we believe that, because we are supporting this bill—supporting the government's attempts to tackle this through this legislation—this parliament should also adopt the $7.2 billion tax package that has been put on the table by Labor. What is so outstanding with the budgetary challenges that we face as a nation is: Labor has proposed measures that will raise $7.2 billion over the next 10 years, and this government has decided not to take those changes and not to take that package. Let us be clear: they are not Labor's costings we are talking about; these are independent costings from the Parliamentary Budget Office, which has determined this $7.2 billion figure.

There are four schedules in this bill, and they all warrant some investigation. Schedule 1 introduces a new concept into the tax law, with this idea of a 'significant global entity', potentially capturing up to 1,000 companies with annual income of over $1 billion. It is a recognition that things have changed, that business has changed, that the world has changed and that how business operates is going to continue to be different. Schedule 2 amends the existing anti-avoidance provision to counter instances when multinational firms use artificial arrangements. Again, these artificial structures, artificial arrangements, are at the heart of multinational tax avoidance. Let us be clear about the principle of multinational tax avoidance. It is about creating the impression, through accounting and other techniques, of being as unprofitable as possible in a decent or higher tax jurisdiction like Australia and of being artificially as profitable as possible in a lower tax jurisdiction. Again, it is an artificial corporate tax structure that does not reflect the reality of how that business operates. Schedule 3 doubles the maximum penalties for firms involved in tax avoidance and profit-shifting schemes. However, these stronger penalties will not apply where there is a reasonable, argued position, where there is a decent case being put forward that happens to be deemed to be incorrect. Schedule 4 implements the OECD's action plan on transfer pricing.

It needs to been noted that this multinational tax bill takes an untested approach to corporate tax and, importantly, fails when it comes to this key measure of transparency. At the heart of tackling multinational tax avoidance needs to be a new approach to transparency, to openness, to making sure that the relevant information is out there for Australian consumers and Australian taxpayers. Fundamentally, where this bill has failed is that it has not adopted that simple benchmark of an open and transparent approach. I have been arguing in this chamber for over a year now that we need to adopt a naming and shaming approach. We need to expose and highlight the worst offenders and the worst companies—those engaging in the sharpest accounting techniques—and force them to come out into the community and justify their position, justify the stance they have taken and justify their approach. I think that would create a better tax system where there is more openness and transparency.

Let's be clear. The tax office already knows who some of the worst offenders are. They are in constant debate and constant engagement with some of the worst offenders. The people who do not seem to know are Treasury, the government and the taxpayers in the Australian community. I say: let's empower those people. Let's have a more open and transparent approach. Let's shine some sunlight in the dark corners of multinational tax avoidance. There is a body of research that demonstrates that, in doing so, you will achieve better tax outcomes and better outcomes for the Australian community.

This multinational tax bill takes an untested approach to corporate tax. While I do believe the bill warrants support, I highlight the fact that there are some serious concerns with it. There are no precedents for this approach around the world. Furthermore, we have sat there with Treasury official after Treasury official at Senate estimates and other Senate hearings, and they are quite clear: they cannot even tell us how much revenue this is going to bring. They cannot even put a figure on it. Their argument is: 'If it's successful and effective, it's going to result in people paying the tax they are due to pay, so this measure itself won't raise revenue.' If you are to accept that, you also have to accept that they cannot even give you a figure of the increase it will bring to other revenue they believe this measure will create an uptick in. We have a bill here for which the government and Treasury themselves are incapable of putting forward a simple figure of how much revenue it will bring.

The main measures in this bill have their genesis in work that was done by the previous member for North Sydney and previous Treasurer, Joe Hockey. I have to say: the former Treasurer deserves credit for a lot of the right rhetoric around multinational tax. The problem always with the former member, Mr Hockey, was that his rhetoric never matched the reality of what he was proposing—and this bill highlights that. What was proposed to be introduced had a scope that was much larger, much more detailed and much more extensive than what was finally put before the parliament. Late last year, the UK government announced the so-called 'Google tax'. In that, I think, was the genesis of what became this bill. It was an idea that was dropped when it was pointed out that we already had anti-avoidance laws and that the UK's approach would breach a whole raft of European Union tax treaties. Having said that, part of what is being proposed in this legislation is based on the idea that, if you create a strong enough penalty, people will behave the right way. Fundamentally, that is not an approach that those of us on this side of politics necessarily oppose. It is not an approach that should be opposed, but it is a question of the implementation of it in this bill. Tough enforcement is necessary, but, when its implementation is not complemented with proper transparency measures and a proper, open approach to tax minimisation, it is going to fail.

I note that, when they were in opposition, those on the other side of the chamber did not give Labor anything like the same support in our efforts to tighten Australia's tax net and address major companies shifting their profits offshore that we are prepared to give the current government, despite the fact that we have such concerns about this proposed legislation. When we brought forward the Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill in 2013, which plugged loopholes in Australia's transfer pricing rules and anti-avoidance provisions, those opposite—those who are proposing the current bill—opposed it. When we introduced the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill in 2012, those opposite vehemently opposed it. When we amended the Taxation Administration Act, through a lot of good work done by, amongst others, the previous member for Lindsay, Mr David Bradbury, who is now working at the OECD, members opposite voted against it. Right now, as we are supporting this bill, those opposite support carving out almost half of the Australian companies from tax transparency laws that apply to them, shielding Australia's 800 richest firms from scrutiny.

It is important that we place the debate around multinational tax avoidance above politics. The Labor Party and those on this side are proud of what we were able to do in government and what we are trying to do in opposition. Importantly, in March this year, we announced a $7.2 billion package. It was the first time that an opposition had proposed any legislation of its kind that early in its term in opposition. Frankly, a lot of us expected that it would be adopted by the government, and we were happy for it to be adopted by the government. We were happy for the legislation approached in a bipartisan way. There are four parts to Labor's plan. Firstly, we propose reversing the current thin capitalisation rules to reduce the amount of debt that companies could claim reductions for in Australia. Our view was that companies must not be able to create their own scenarios, rules and structures simply to load their Australian operations with international debt. Secondly, we say that Australia should better align its rules on hybrid entities and instruments with tax laws in other countries. Again, this is about making sure we minimise the number of mismatches and the number of hybrid rules that allow these loopholes. Thirdly, we also said that you need to properly fund and resource the ATO. Finally, and importantly, we have been saying that you need to have more transparency, more openness and more accountability.

Labor's package, if the government chose to adopt it, could actually work side by side with this legislation. The important difference is that our costed policy would bring in $7.2 billion over the next decade. What is astounding is that the government has legislation here that, by its own account, it cannot put one single figure behind as to what it is actually going to bring in. We can—and these are not our figures; these are independently costed figures from the Parliamentary Budget Office.

Why is that the case? This bill fails to address the practice of companies loading debt onto their Australian operations to artificially inflate their tax deductions. We have seen that just in recent days. Let us have a look at the example of Chevron that has been reported on in the past few days. Today we found that the amount of tax that a company like Chevron is paying at the moment in their Australian operation would equate to what a normal Australian family spends on their weekly shopping. Let me be clear: there are legitimate situations for deductions, and at different stages of the business cycle there is going to be, understandably, less profit and, as a result, less tax. What concerns me is: if we do not get these tax settings right now, then—as we move away from the mining boom that was based around iron ore towards the importance that LNG and gas are going to provide to the Australian economy—it will result in a situation where some of Australia's largest companies are able to minimise their tax, not just through what we have seen in the past with transfer pricing but particularly as it relates to debt.

So we have a situation where Australia needs a multinational tax system that is tough, that is open, that is transparent and that is equitable. And that is not what we have at the moment. What we have at the moment is a system of rules and laws that are geared towards a handful of companies.

Over the past year, through the work that has been done by the Senate Economics References Committee's inquiry into multinational tax avoidance—and I do need to credit the incredible work that was done by the former leader of the Greens, Christine Milne, in this space—we saw example after example of multinational firms structuring and gearing themselves in such a way as to minimise their Australian tax liabilities. By the end of this year, we will be coming out with our final report; two months earlier, we came out with our interim report. The interim report really focused on this issue of transparency. Our final report will focus on issues like transfer pricing and debt loading. But it is important to understand that—as important as it is to make sure that we have the rules right, the settings right and the laws right—what we actually need is parliamentarians and public leaders to be debating about making sure that we have the equity right and we actually have a system that is fair, transparent, open and tough, and that tackles that handful of companies that are behaving poorly. We know who they are. We know their structures. We know they largely seem to be multinational firms that operate internationally with structures they have created in Australia to minimise their tax liabilities. We know the sectors that they exist in—they are largely spaces like the tech sector, the mining sector, the pharmaceutical sector and other kinds of international sectors.

This is a bill that deserves support. But let me be clear: this is not the perfect bill. This is not the solution. And this is not the best way of approaching the challenges that we have.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

I rise to oppose the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015. I suspect I will be the only parliamentarian to do so.

It is easy to throw stones at corporations. Even though a corporation is just a collective of individuals pooling their resources to make stuff, 'corporation' is still a dirty word. It is even easier to throw stones at multinational corporations. To be multinational just means you sell your stuff to willing buyers in more than one country. But 'multinational' still serves as an effective dog whistle for those who do not like foreigners. And it is easier still to rail against tax avoidance. After all, we should all pay our fair share.

The thing is, we have tried to define what a fair share is in tax law, and the multinational corporations have paid that fair share. As it happens, we set the bar high when we defined what a fair share is. Australia gets more corporate tax as a share of GDP than any other OECD country apart from Norway. We have passed tax laws that tell multinational corporations what tax rate they must pay, what revenue needs to be taxed and what expenses are to be deducted. So, if our idea of what a fair share is has changed, we should legislate changes to the tax rate, to what we mean by 'revenue' or to what we mean by 'expenses'.

The legislation before us today does nothing to change the tax rate, what we mean by 'revenue' or what we mean by 'expenses'. It just says that, if you are a large multinational corporation who has paid the legislated tax rate, you have still broken the law if you have done anything with the purpose of getting a tax benefit. The ATO and courts will decide whether you have broken the law, after the fact, in an unpredictable, arbitrary and ad hoc way. This is the justice of a kangaroo court.

What makes this even more farcical is that we already have a despicable rule that says you have broken the law if you have done something that is otherwise legal but that is done with the purpose of getting a tax benefit. It is called the general anti-avoidance provision. It applies to everyone, including multinational companies. No wonder the government has struggled to identify any increase in revenue that will arise with the passage of the bill before us today. It is nothing but grandstanding.

This bill is targeted at companies like Google, Apple and Microsoft—businesses that generate ingenious goods and services from places that are as far away from Australia as you can imagine. Even when their products came in plastic wrapping, which not many do now, Australia did not even provide the plastic that surrounded the cardboard that encased the shiny product. And we have absolutely nothing to do with the science, marketing nous and entrepreneurship that made those products possible. The idea that anything more than a tiny fraction of the sales revenue should be treated as Aussie-grown profits is jingoism worthy of the most embarrassing xenophobe.

It is obvious that companies set up their offices, base their intangible activities, and book their profits, in low tax jurisdictions. Places like Singapore are teeming with business shirts, even though it is a place where the humidity never drops and your shirt sticks to your back. The business-people of the world would much prefer to do their business in Australia, with its beaches, open spaces, cool sea breezes, and great coffee. So will someone please think of the business-people and halve our corporate tax rate!

Making life harder for multinationals in a competitive market and expecting more revenue is like punching someone in the nose and expecting them to like you more. Instead, we should remember that big corporations are kept in check by competition. But there is no competition with big government, which has the unique power of being able to take your money by force.

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

I must confess that I am a little bit confused about where the Turnbull government stands on multinational tax avoidance. Just last sitting week parliament passed a government bill that wound back one of Labor's key tax transparency measures. The bill I refer to is the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill. It follows the tradition of those opposite of inserting a misnomer into the title of the bill to hide their real intent, because the bill passed last month does not better-target Labor's laws; it guts them. This was just one in a series of wind-backs of Labor's anti-avoidance reforms, through which the government has so far handed back $1.1 billion to multinational companies. So it is quite puzzling to see the government put forward legislation to strengthen the provisions, having already weakened them in several other pieces of legislation.

Having said that, the provisions in this bill are a positive, albeit small, step forward, and we support them. But even with the passage of this bill the government's measures are a far cry from the serious action on multinational tax avoidance that Labor has announced with our $7.2 billion package. I will talk more about that later, but let me first outline why the issue of multinational tax avoidance is so important.

In June last year I met with representatives of Micah Challenge, a Christian anti-poverty organisation. During my time in the Senate I have had many meetings with Micah Challenge. They do an excellent job advocating for the world's poor. At the time of my meeting last year, Micah Challenge had joined with the Tax Justice Network, a global movement campaigning for measures to tackle tax avoidance by multinational companies. I have spoken in this place previously about my meeting with Micah Challenge and the issue of tax justice, but I will return to some of the points I made in that speech, because they are relevant to the bill we are debating today.

It would interest many people, and possibly even shock them, to learn that multinational companies manage to use their tax arrangements to unfairly avoid paying around $160 billion in tax in developing countries. This is the estimate from UK charity Christian Aid. By comparison, the world's annual aid contribution is only $135 billion a year. In other words, multinational tax avoidance in developing countries is greater than the combined foreign aid budgets of all contributing nations.

So, as you can see, seriously combating this problem would go a long way towards eliminating extreme poverty. When it comes to poverty alleviation, tax revenue can have some advantages over development assistance, provided the government receiving it and spending it is doing so in a proper and transparent way. For example, tax revenue is a more stable and secure source of income, which can help countries plan for the long-term future. Also, the governments of recipient countries are accountable to their own citizens for the expenditure of the money, rather than to a foreign government.

Having said that, tax revenue should be a supplement to development assistance and not a substitute for it. Development assistance should play an important role in alleviating extreme poverty, for as long as it persists. I will continue to campaign fervently for this government to reverse its cruel and heartless $11.3 billion in cuts to its aid budget. I will also continue campaigning for tax justice.

To highlight the ridiculousness of multinational tax avoidance, I mentioned in my speech last year the story of the sugar cane cutter working in Zambia for USD$14 a day, who paid more absolute tax than the multinational company Zambia Sugar, despite the latter making $18 million in profit. A similar example is that of the richest man in the world, Warren Buffet, pointing out that he pays a lower rate of tax than his secretary. All this would be quite funny if it was not so tragic that multinational companies making profits in the millions and billions can end up paying barely any tax, while the tax burden falls to middle income earners.

You may be asking yourself, why I am talking about poverty in developing countries when we are debating a bill that relates to Australia. Well, the answer is quite simple. Tax justice is as much an issue in developed countries like Australia as it is in developing countries. All countries, no matter how wealthy, have people who are experiencing poverty and disadvantage. This poverty and disadvantage is exacerbated when big companies do not pay their fair share of tax, because in order to fund essential services the tax burden falls to low- and middle-income earners. There is clearly something awry in Australia when the three richest people have more wealth than the poorest one million.

But the issue of multinational tax avoidance is relevant to the issue of global extreme poverty regardless of which jurisdiction you are talking about. This is a global problem and, when action is taken by developed countries, multinationals find it more difficult to avoid their tax obligations in countries where poverty is rife. The more countries around the world there are that crack down on tax avoidance in their own jurisdictions, the fewer places multinational companies will have to shift and hide their profits.

Let me take some time to explain how multinational tax avoidance works, because it is very relevant to this bill and, of course, this debate. Multinational businesses use sophisticated accounting techniques and a complex web of companies to shift their profits from higher taxing jurisdictions to lower taxing jurisdictions. This is increasingly becoming a problem when advances in information and communications technology are making business increasingly globalised. Also, with an increasing amount of business taking the form of selling intangible assets like information or online services, it is becoming easier for businesses to choose where they conduct their business from and harder for governments to make rules defining where business is conducted.

It is relatively easy to track how much tax an individual or a company should pay when all their activity is confined within our borders, but it becomes a whole lot trickier when an intricate web of companies forming a consolidated entity operates across national borders. If a company can effectively shift most or all of its profits to a tax haven, it can avoid paying any tax or, at least, paying a reasonable share of tax that is commensurate with community standards. One of the popular ways for multinationals to artificially shift profits from one jurisdiction to another is through the payment of licence fees or royalties from subsidiaries to a head company. Another popular arrangement is where the head company grants the subsidiary a loan, and the loan repayments help the subsidiary to write off some of their profits. If you look objectively at these arrangements—the amount of the licence fees and loans, and where the head company is situated—the structure makes no commercial sense, except from the point of view of minimising the company's tax bill. It is thoroughly ridiculous, for example, that a small territory like the Cayman Islands, a tax haven with a population of around 60,000 people, is home to 100,000 registered companies. How many of these 100,000 companies actually do business in the Caymans, other than on paper?

We have recently had a report from a Senate inquiry which reveals just how aggressive some multinational firms have become with this activity. In its submission to the tax inquiry, the tax office reported that more than half of Australia's cross-border trade—over $300 billion a year—is from companies transferring money between their own subsidiaries. The inquiry heard evidence that one big multinational firm may have paid as little as two per cent tax on billions of dollars in revenue. By contrast, an average Australian wage earner pays 21c in the dollar. If an average wage earner were able to pay the same rate of tax as that multinational company, they would pay $15,000 less a year. This is an insidious problem that is only going to get worse as finance becomes more mobile. It is a problem that needs action not just from individual countries but from the global community.

The Tax Justice Network proposed three measures to help combat the problem of multinational tax avoidance. They include the automatic exchange of information between tax authorities in different countries; a public register that lists the owners and beneficiaries of companies, trusts and foundations; and requiring multinational companies to break down their financial reporting on a country-by-country basis. We on this side of the chamber have gone a long way towards implementing what the Tax Justice Network has been campaigning for. We are very proud of our record when it comes to increasing transparency and clamping down on tax avoidance by large multinational companies.

I will just briefly summarise the measures to tackle tax avoidance that Labor has implemented during our time in government. We passed legislation that plugged loopholes in Australia's transfer-pricing rules and anti-avoidance provisions. We amended the Taxation Administration Act to require the Australian Taxation Office to publish information about the income, taxable income and tax paid by companies earning over $100 million. We also passed legislation which cracked down on companies overvaluing assets in international transactions. I should mention at this point that the last three measures I referred to were opposed by the coalition and, as I mentioned earlier, one of them was recently reversed by a government bill.

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

Shame!

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

You are absolutely right, Senator O'Neill—shame! Labor in government also signed 28 bilateral information-sharing agreements with tax agencies in other countries, including the Cayman Islands and Monaco, which netted around $730 million in additional tax between 2012 and 2014. And we gave the Australian Taxation Office $109 million to set up a specific audit program looking at the use of offshore marketing hubs. This program has already paid dividends, with 13 companies hit with revised tax bills worth $250 million. The tax office estimates that this program will return $1 billion in additional revenue to Australia over four years. Of course, there is more to be done in this area. In March this year, Labor announced a further package of new measures, which will return $7.2 billion to Australia over the next decade. This package was developed after extensive consultation with experts and was independently costed by the Parliamentary Budget Office.

Like Labor, this government talks tough on multinational tax avoidance. But unlike us, those opposite talk the talk but they do not and cannot walk the walk. In the 2015 budget, the former Treasurer Mr Hockey announced changes to part IVA, the anti-avoidance provisions, of the Income Tax Assessment Act. I wonder if those opposite know how much revenue the Treasury estimated that this so-called crackdown would extract in additional revenue. Does anyone want to guess? Heads are down. According to the budget papers, it would extract zero, nothing, absolutely zip. It is interesting that Mr Hockey as shadow Treasurer referred to Labor's tightening of the part IVA provisions as 'an unnecessary overreaction' and 'more red tape for business'. I guess at the time he was revealing what he really thought, because his subsequent changes were mostly cosmetic.

Let us not forget that, while puffing their chests and claiming a crackdown on multinational companies, the government have actually wound back antiavoidance measures put in place by Labor, handing back $1.1 billion to multinational companies. Yes, that is absolutely right: $1.1 billion. While we are disappointed with the government's record on multinational tax avoidance, we will support the current bill. We are willing to support the reforms contained in this bill because we believe that some action to crack down on multinational tax avoidance is better than none.

The bill has four schedules. Schedule 1 introduces the concept of a 'significant global entity', a term which applies to 1,000 companies with annual income over $1 billion. Schedule 2 amends the existing antiavoidance provision to counter instances where multinational firms use artificial arrangements to avoid paying corporate tax in Australia. Up to 100 companies are likely to be affected by this measure. Schedule 3 doubles the maximum penalties for firms involved in tax avoidance and profit-shifting schemes, except where they have a reasonably arguable positon. And schedule 4 implements the Organisation for Economic Cooperation and Development's action plan on transfer pricing documentation and country-by-country reporting. There are no precedents anywhere else in the world for the corporate tax measures in this bill.

Given that these measures are untested, not even Treasury has been able to estimate how much revenue it will bring in. In fact, it remains to be seen if this bill will raise even one extra dollar of Australian tax. Imagine what the reaction of those opposite would be if Labor introduced a package of tax avoidance measures which had a series of asterisks next to the costings. But of course we did not do that. Instead, we laid out a detailed plan, in consultation with stakeholders, and had it costed by the Parliamentary Budget Office. Unlike the bill currently before the chamber, the PBO has determined that it would raise $7.2 billion in revenue.

The government's bill focuses on companies that artificially avoid booking revenue in Australia—in other words, ensuring that revenue raised here is declared here. However, the bill does nothing to address the major problem underpinning multinational tax avoidance—the use of debt deductions to send money offshore. Tackling debt deductions is a core element of our reforms and will close one of the major loopholes that multinational companies use to avoid their tax obligations. We have never said that our package is the final word on tackling multinational tax avoidance, but we have called on the government, and will continue to do so, to adopt our measures alongside their own.

Mr Turnbull recently said the following at the Prime Minister's Prizes for Science dinner:

If somebody else has done something that is even better than what we have thought of, then we will, recognising that plagiarism is the sincerest form of flattery; we will pinch it and use it.

Well, Labor has a package that would represent some real action in cracking down on multinational tax avoidance. Labor's plan has been independently costed by the Parliamentary Budget Office and we know that it will raise real revenue—$7.2 billion of it. If the government have the good sense to pinch our ideas, if they have the good sense to adopt our package, then we say, 'You're absolutely welcome to it.' We want and need real action to make our tax system fairer. We want and need to take the burden off small businesses and low- and middle-income earners. Perhaps, if the Turnbull government raises some real money from those who can most afford it, they will not have to spend so much time attacking low- and middle-income earners.

Each dollar raised by making multinational companies pay their fair share of tax could replace a dollar that the government has sought to rip from the pockets of pensioners, young jobseekers, university students or people just visiting the doctor. It just goes to show the twisted priorities when the government is openly canvassing a 15 per cent tax on everything—a tax which hits the people who can least afford it the hardest—yet they will not take strong action to ensure that our biggest and wealthiest companies pay their fair share.

The government really needs to get serious about multinational tax avoidance. Our new Prime Minister, Mr Turnbull, is trying to tell us that we have a 21st century government. Let me tell you what a 21st century government does. It considers the problems of the 21st century and it applies 21st century solutions. But that is not what the government have done. As I keep reminding the Senate, the so-called 21st century government took Australia's largest, most modern infrastructure project, the 21st century National Broadband Network, and proceeded to roll it out using 20th century technology. That was after they delayed the project by two years and blew out the cost by $26 billion. And this so-called 21st century government still do not have a serious, effective solution to address dangerous climate change by cutting Australia's carbon emissions.

I mentioned earlier that advances in information and communications technology and the growing global trade of intangible goods and services is exacerbating the problem of multinational tax avoidance. A 21st century government is one that will get serious about tackling this problem. The bill is a small step in the right direction, but the government should get on board with Labor's reforms—which, as I have said, will raise $7.2 billion from Australia's multinational companies. If they did, it would be a big step towards addressing the inequity that allows many of those who can most afford it to pay the lowest rates of tax. It would also go a long way towards restoring fairness to Australia's taxation system. If Prime Minister Turnbull wants to show he is serious about tackling multinational tax avoidance and if he wants to show that he can drag the right wing of his party kicking and screaming into the 21st century, then he should adopt Labor's multinational tax package. The 21st century is beckoning. Let's see if our self-proclaimed 21st century Prime Minister can answer that call.

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

I rise to speak to the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 with a degree of disappointment in what this piece of legislation attempts to enact. There is a gap between what was possible and what is actually being attempted by a government that seems too afraid of big companies to engage in a proper and fair conversation on behalf of the Australian people and ask the multinational companies to pay their fair share. Australians talk an awful lot about fairness. It is one of the things that makes me particularly proud of this country. The notion that we should all have an equal go, pay our relatively fair amounts of tax and take the resources that we need when we need them is something that Australians believe in and understand.

I think that even the Abbott government, before the Turnbull takeover, had a sense that Australians are actually getting to the point where they are pretty sick and tired of hearing about multinational companies—multinational meaning exactly that, that they can operate across multiple jurisdictions. Multinationals have the power to move their money around—move it left, right, up, down or in whatever way the latest expertise that they can buy tells them they should move it—in order to minimise the amount of tax that they pay in this jurisdiction in which they are making a profit. I know from my time on the Joint Committee on Corporations and Financial Services with Acting Deputy President Williams that he has a very, very strong sense of justice. I know the Acting Deputy President, like me, would think that in normal transactions between ordinary individuals—people in the everyday community—it is not fair for people to abuse access to knowledge and information. Yet, that is exactly what we see these multinational companies doing.

In that context, where there has been this awakening and this very significant public conversation about getting multinationals to pay their fair share, the Abbott-Turnbull government has decided to have a little bit of a go at addressing this issue of national concern. When I say 'a little bit of a go', I mean 'a little bit' of a go. There is nothing brave about this legislation. Although we will support it, because it is sort of an approximation of an effort in the right direction, it is nothing that is really calling on fairness from these very powerful, very wealthy organisations that should be doing some of the heavy lifting in terms of the revenue needs of this country. This legislation is a little bit like somebody going up to a bigger person—somebody quite significantly bigger than them—tapping them on the shoulder and simply saying, 'Would you mind giving me just a little bit of all that you have?' That is what this legislation equates to: a little tap on the shoulder of big business, of multinational businesses, and asking politely, 'Please sir, could you give me a little bit more?'

The reality is that this is a government that lacks the courage to take on vested interests, and there are a whole range of reasons for that. But it is a government that fails to understand that it is in a position of responsibility, as the government of this nation, to take a fair whack at these businesses that are seeking to avoid corporate and ethical responsibility as participants in an economy—not as people, organisations and businesses that should feel free to fly to another jurisdiction in order to reduce the burden of tax on that particular company, at the cost of so many. I know in the comments that have been made by my colleagues earlier this evening—I believe it was Senator Dastyari who used the term—that tax avoidance, as constructed by these multinational companies, is in fact not a 'victimless crime.' I can imagine leaders of these multinational companies, many of them living in the lap of luxury, are very, very disconnected from the challenging lives of ordinary Australians, who are finding it really hard to make ends meet and all the time paying their fair share of tax.

Let us flick to these multinational companies and executives who run them. You can only imagine the sorts of conversations where they stand there, talking to one another, saying things like: 'We had a great year, last year. We minimised our tax—actually, we got it down to a point where we didn't have any debts to pay to the Commonwealth at all. We got away with it. Would you like to find out where we got our advice?' Then some sort of insider trading referral to companies—often accountancy companies—who are making money on the back of giving unethical advice to multinational companies at the cost of ordinary Australians, at the cost of ordinary working people who are proud to pay their fair share of tax.

They are proud to pay because they know that is going to put books on the tables in the classrooms so that children—their grandchildren, their children and the future generations—can learn to read, write and do arithmetic in the oldest possible way and be able to participate in the global economy. Ordinary people paying their fair share of tax understand that that is what their money does. They understand that it builds roads, makes hospitals accessible and provides the care and support that we take for granted in this great nation. While Australians of ordinary means—regular, hardworking, fair and ethical Australians—are bearing their burden, multinationals are seeking flight to other jurisdictions to abandon any fair responsibility to the nation in which they profit.

Debate interrupted.