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

Minister, I think you are the fourth or fifth minister who has been asked questions about this. Perhaps we will be able to get some answers from you that we have been unable so far to get from others. Why is this not a bill that can be improved or should be improved through potential amendments designed to increase the amount of disclosure? So far, the debate we have been having and the questions we have been asking have centred around why different information has or has not been provided and why different reasoning has been provided. I want to ask a more specific and direct question: does the government believe that this bill can be improved through the supporting of amendments?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

Thank you for the question. We believe that we have the balance right in terms of the provisions of the bill, and it is in accordance with the OECD.

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

I want to reiterate the position of those of us on this side of politics. I believe—and Senator Cash made a point of referring to earlier remarks I had made in this chamber—that this is a good bill. I believe this bill warrants support. I believe this bill goes a long way towards making sure that there is a greater level of transparency and that there are stronger rules around multinational tax avoidance. I believe that former Treasurer Mr Joe Hockey should be commended for the work he has done on this bill. But I also believe that this is not a perfect bill. I also believe that this bill, while it is a good bill and is better than the current situation and circumstances, is one that could actually do with improvement. It is a bill that could do with some changes.

I want to draw your attention to potential changes around the area of making sure there is greater disclosure for private Australian companies that have over $100 million in revenue in any given year. I know this is slightly unfair on the minister, because some of us in this chamber have been part of this debate for the past day and are coming into this with a lot more information. I note that the minister is acting in the capacity at the moment. Minister Cormann, who is perhaps the person who would normally have carriage of this, is at the moment on very important government business in Turkey. So, acknowledging that there is perhaps a limited level of information you may have available to you, Minister, I do believe there is an opportunity.

We heard from Senator Xenophon today about his concerns for the releasing of information about companies of over $100 million. The concern that Senator Xenophon had was one of ensuring that businesses that released this information were not taken advantage of in the chain of responsibility, and also by other companies. The concern would be this. If I were a company, a family business, I may have quite significant revenue—let us say it is $100 million, $120 million or $150 million. I may have a concern that the publication of that information would materially hurt my business in its negotiations with some larger suppliers, a classic example being your Coles or your Woolworths, who are well-known for being quite aggressive in some of their techniques and in how they drive these things.

I do not believe those concerns are right. The reason I do not believe that Senator Xenophon is right in this is that the information made available is available elsewhere. In fact, you can get all of that information, and more, by paying $38 to ASIC. ASIC will provide you with a more detailed series of that type of information, simply with the payment of $38. I believe there is the potential, however, to allow the exclusion of those types of companies by giving the tax office the opportunity to remove them. Would the government consider supporting an amendment that would actually address the concerns raised by Senator Xenophon but would nonetheless address those issues?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

The short answer is no.

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

I want to begin by thanking the minister. We have had lots of attempts at answers previously, and I would have to say that that was probably the most frank and honest one. Your reputation precedes you! Why won't you consider supporting it?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

As you have said, this is a good bill. It brings in greater levels of transparency. You have commended former Treasury Hockey for his work on it. We believe the bill has the right balance.

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

Is the minister then saying that he believes the enhancement of transparency by including this information—even if we are going to give an opt-out for certain businesses—is going too far? Is that the position of the government?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

We believe the bill has the right balance. We believe that those additional changes that you talk about would actually impose greater red tape on business.

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

Senator McGrath, welcome to the chamber—the chamber of horrors for you guys, no doubt, given that I think you are the fifth person we have had on the front bench dealing with this bill and the proposed amendments. You referred to greater red tape. Could you be more precise about that, given that the financial information these companies have to give to ASIC is already lodged, and it is a lot more extensive than what we are asking for. To make it clear for you, the disclosure requirements we are seeking to include are: the ABN and name of the company or individual; the total income for the income year; the taxable or net income, if any, for the income year; and, income tax payable, if any, for the financial year.

We are asking for four things which are nowhere near as substantial as what has been lodged at ASIC. In fact, Senator Xenophon showed me an ASIC request, which he had done this morning, I presume, for another South Australian company. I looked at it very briefly and it was full of consolidated accounts and information. So where does the red-tape argument come from if we are simply asking for four things to be taken out of that and added to a register for around 1,000 companies? Perhaps that is the last piece of information. We estimate that around 1,000 companies would be captured by this register.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

I will address the fact that I am the fifth minister to speak here. Perhaps because of the filibustering of certain parties in this chamber, I think, we are going around in circles at the moment.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Circle work.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

There has been lots of circle work. That is perhaps why this has taken a lot longer than was expected, because of certain activities of other parties here. In relation to red tape, we believe that the bill has the right balance and that any additional proposals will increase the red tape on business. The ATO and ASIC have suitable powers, presently, to seek the information they require.

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

In relation to the filibuster, we will continue to ask questions until we get decent answers. They have not been forthcoming. Our job in committee is to thrash out these things and to make sure that legislation, counter proposals and these kinds of things are thoroughly assessed by the committee. That is our job. We are a house of review and I do not need to tell you that. I have asked a number of what I thought were perfectly reasonable questions that I have not received proper answers to. Let me try another tack where I do want information. Your government was talking in the budget this year about a voluntary corporate disclosure code. Could you explain to the committee why you have moved from a voluntary to a mandatory code in the legislation that we were debating for multinationals with a turnover of more than $1 billion? What made you decide that you needed a mandatory code of disclosure?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

Sorry, Senator, could you ask that again please?

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

We often have this debate between mandatory and voluntary codes, or regulations, let's say. In this budget the previous Treasurer, Joe Hockey, introduced an idea to have a voluntary corporate disclosure code where the Treasurer was very clear about the need for disclosure by corporations in paying their fair share of tax, and he even said that it will discourage companies from engaging in aggressive tax avoidance. This is the idea of disclosure, and I presume that is behind the bill that you originally brought in that we are about to move an amendment to.

I think that, clearly, we are on the same page with the government, the LNP, and I suppose I should include the Nationals in that. The Greens, Labor and the crossbenchers all think that disclosure is a good thing, which is the whole basis of your bill. The Treasurer made it very clear that disclosure was important and said:

It will also discourage companies from engaging in aggressive tax avoidance.

He then said:

The Government would like more companies, particularly large multinationals … to publicly disclose their tax affairs.

That is what we are asking for. You are saying that it is for $1 billion or more. I am asking: why, firstly, did you move from the idea of a voluntary code to a mandatory code—hence the legislation—and, secondly, why you did not go with the $100 million as the threshold, because that was the previous legislation? Why $1 billion?

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

This is nothing to do with the bill before the committee at the moment. I am afraid that, in terms of the information provided, I would prefer to be answering questions relevant to the bill before the committee.

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

I note that I have been provided with sheet 7796, which appears to be a potential amendment in the name of Senator Whish-Wilson. In light of that, I would like to inform the chamber that I will not be proceeding with amendments on sheets 7794 and 7795 that have been circulated in my name on behalf of the opposition.

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

That has been noted.

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

Perhaps, to make it easier for Senator McGrath, I will move the Australian Greens amendments on sheet 7796, which is an omnibus that includes the various compilations of what we have seen today.

The TEMPORARY CHAIRMAN: You will need seek leave to move (1) and (2) together.

by leave—I move Australian Greens amendments (1) and (2) on sheet 7796 together:

(1) Page 2, clause 2 (table item 1), omit the table item, substitute:

(2) Page 17 (after line 3), at the end of the Bill, add:

Schedule 5—Reporting of information about corporate tax entities

Part 1—Repeal of Act

Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015

1 The whole of the Act

  Repeal the Act.

Part 2—Application

2 Application

(1) This item applies if the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015 receives the Royal Assent before this Schedule commences.

(2) Despite section 7 of the Acts Interpretation Act 1901, the Taxation Administration Act 1953 as in force immediately before that Royal Assent continues to apply, by force of this item, as if the amendments made by the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015 had never been made.

Part 3—Reporting of information

Taxation Administration Act 1953

3 Subsection 3C(2)

  Omit "The Commissioner", substitute "Subject to subsection (2A), the Commissioner.

4 After subsection 3C(2)

  Insert:

  (2A) If:

  (a) an entity applies to the Commissioner in writing; and

  (b) at the end of the income year the entity is an Australian resident that is a private company for the income year that neither:

     (i) is a member of a wholly-owned group that has a foreign resident ultimate holding company; or

     (ii) has a foreign shareholding percentage of 50% or greater; and

(c) the Commissioner is satisfied that to make the information publicly available may be significantly prejudicial to any of the entity's current or future commercial negotiations;

the Commissioner may determine that subsection (2) does not apply in relation to the entity. An expression used in this subsection that is also used in the Income Tax Assessment Act 1997 has the same meaning as in that Act.

  (2B) A determination under subsection (2A) is not a legislative instrument.

5 After subsection 3C(3)

  Insert:

  (3A) The Commissioner must ensure that the information made publicly available under subsection (2) includes:

  (a) a statement to the effect that:

     (i) the information may not reflect the full financial position of the entity; and

     (ii) more comprehensive information may be available from the Australian Securities and Investment Commission; and

  (b) the address for the part of the Australian Securities and Investment Commission's website via which the information referred to in subparagraph (a)(ii) may be found.

6 Application of amendments

  The amendments made by this Schedule apply in relation to an entity for the 2013-14 income year and each later income year unless the Commissioner has, before the commencement of this Schedule, made publicly available information about the entity for the income year under subsection 3C(2) of the Taxation Administration Act 1953.

This amendment before us is a slightly amended version of the amendment that the Greens put up last night, which had not been put through the committee. We had circulated it but it was not moved. I thank the ALP for doing some hard work in the last 24 hours to improve the amendment, and thank some of the Independents who have given us feedback on the amendment.

The amendment that I have just moved relates to the repeal of the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Act 2015, which we have discussed for well over a day, but there is additional information which Senator Xenophon will no doubt want to talk to. We have included a clause, part 3, clause 4, after subsection 3C(2), where we have inserted, under 2A:

If:

  (a) an entity applies to the Commissioner in writing; and

  (b) at the end of the income year the entity is an Australian resident that is a private company for the income year that neither:

     (i) is a member of a wholly owned group that has a foreign resident ultimate holding company; or

     (ii) has a foreign shareholding percentage of 50% or greater; and

  (c) the Commissioner—

that is obviously the Tax Commissioner—

is satisfied that to make the information publicly available may be significantly prejudicial to any of the entity's current or future commercial negotiations;

the Commissioner may determine that subsection (2) does not apply in relation to the entity. An expression used in this subsection that is also used in the Income Tax Assessment Act 1997 has the same meaning as in that Act.

This is to allay concerns that some senators, including Senator Xenophon, have received from companies that somehow the disclosure of their information may be prejudicial, so we wanted to be very cognisant of the fact that, if that is the case and there is a basis for that, those companies can actually receive a judgement from the commissioner on the particular circumstance that relates to their commercial considerations.

We have also inserted in clause 5:

After subsection 3C(3)

  Insert:

  (3A) The Commissioner must ensure that the information made publicly available under subsection (2) includes:

  (a) a statement to the effect that:

     (i) the information may not reflect the full financial position of the entity; and

     (ii) more comprehensive information may be available from the Australian Securities and Investment Commission; and

  (b) the address for the part of the Australian Securities and Investment Commission's website via which the information referred to in subparagraph (a)(ii) may be found.

We have put in a really simple clause that makes a lot of sense. We are putting it up-front that, if you are going to make judgements about, say, people's tax avoidance from the register, or tax evasion or tax minimisation or tax paid, look at the detail first. In other words, go to ASIC, go to the website, and get the information before you make a judgement. Let's make it clear: that is a very important piece of information. If you are worried that the tabloid press might use this to beat up on rich people or whatever, there is a very clear sign that there is more detailed information available on the ASIC website and that you should not draw those conclusions.

Nevertheless, this information will increase transparency and the disclosure will help raise awareness and educate the public on the importance of avoidance of tax and tax minimisation. Let's be honest: the government has been happy to keep these regulations on foreign companies with over $100 million. Foreign companies have to put this information on a register, but you seem to have a reason for not explaining why Australian companies with over $100 million have been exempted. Now both foreign and domestic companies will be required to put this information on a register. That is what we have been asking for.

As I very importantly pointed out, Senator McGrath, this is what the Treasurer was talking about in his budget statement this year. I will read you his words again. He was talking about a voluntary code, but this is a mandatory code and it will highlight companies that are paying their fair share of tax. It could be a good thing for companies that are paying their fair share of tax and it will put to bed any potential issues that people may have. It will also discourage companies from engaging in aggressive tax avoidance. So it rewards the companies that are doing the right thing and it may be a disincentive, through reputational risk or otherwise, for companies that are doing the wrong thing.

The Treasurer then said:

The government would like more companies—

we estimate 1,000 domestic companies will have to comply with this legislation or the ATO will have to provide their details—

particularly large multinationals operating in Australia, to publicly disclose their tax affairs.

That is it. That is from your own government. That is what we are doing here tonight, but we are not shielding Australian companies with over $100 million or wealthy Australians from disclosure of their tax affairs. The whole point is to have that disclosure up-front and put it in the public domain, and raise education, awareness and debate around issues on tax avoidance, which is what a broad range of stakeholders has been asking for. The Greens—and I think Labor and hopefully others in this chamber—believe this is good legislation and that you will support it and make sure that we have a good set of laws in this country relating to disclosure of tax affairs.

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

This is a good amendment. It improves the existing laws and Labor will be supporting this amendment.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I indicate that I will be supporting this amendment for these reasons. I want to set them out and I want to put this in appropriate context. A few weeks ago, the government's bill exempting companies with more than $100 million in revenue, not in profits, from publishing some basic headline details—essentially of revenue, taxable income and tax payable—was passed. I reluctantly supported that legislation because the argument that was put to me, which I thought had some credibility at the time, was that there could be companies, particularly food processors that may have turnover of $100 million a year or more in their commercial dealings with, say, Coles or Woolworths, that would be prejudiced by the publication of this information. I apologise to the Senate because I did not do my due diligence as I ought to have in relation to that piece of legislation. If you look at what is currently available, if you are a company with a turnover of $25 million a year or more—not $100 million but $25 million a year or more—you are required to provide to the Australian Securities and Investment Commission, ASIC, a copy of financial statements and reports.

Today, I spent $38 and got a copy of Teys Australia Pty Ltd—not because I am picking on them, but because they are referred to in the Senate inquiry report on this and they were a company that were good enough to express concerns about that transparency measure. If you look at that, the information given is very comprehensive. It gives statements of profit or loss and other comprehensive income at page 5. It gives statements of financial position at page 6, including current tax liability, and at page 24, in the notes for the financial statement, it actually talks about the level of income tax paid. So it is not as though Coles and Woolies would not have this information if they wanted to find it. I think it is stretching it to say that those companies would be prejudiced in their commercial dealings with Coles and Woolies, because there is, in any event, a requirement to publish this information with a much lower threshold of $25 million.

But I will support these amendments because they take into account that, if there were, in exceptional circumstances, a case where the publication of this headline information of revenue, taxable income and tax paid would in any way be prejudicial to a company, you could seek an exemption from the commissioner. That is why I supported the government's bill in the first place. I do not accept that there is unreasonable red tape with these amendments, for the simple reason that these companies, once they hit a threshold of $25 million—not $100 million—have to provide this information to ASIC in any event. But you need to pay $38 for that. That is the case. I am very happy for the assistant minister to correct me on that if that is not the case, but that is my clear understanding, based on the evidence that has been provided to me.

I will support these amendments. They still keep the integrity of what the government passed several weeks ago intact, in that, if there were any suggestion that a company would be prejudiced by the release of headline information in their commercial dealings with a much larger company in any negotiations, they would still be protected from that—although, for the cost of $38 you can get a hell of a lot of information by going on the ASIC site. I think it is appropriate to pass these amendments. I see these amendments as being within the context of the very good intent of this bill introduced by the government as a result of the very hard work done in relation to this by former Treasurer the Hon. Joe Hockey. I support these amendments. I know the government's position is that this is not relevant, like the general purpose reporting amendment that was passed last night—the amendment that I moved, which was supported by a majority of the Senate—but I say it is relevant because it is all about having a level of transparency, encouraging public debate on the issue of multinational tax avoidance, and making sure that people pay their fair share of tax. I see these amendments within that broader context.

So, for those reasons, I support these amendments. They provide a very important protection in the very unlikely event that there could be any risk to any food processors—for instance, any agricultural company—in their dealings with a much bigger company. And I am thinking of Coles and Woolworths—not that I would suggest that they would behave unfairly with any suppliers, but those allegations have been made. These amendments provide that protection. So, for those reasons, I support the amendments.

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

The government does not support the amendments. I notice, Senator Xenophon, that the Senate Economics Legislation Committee, of which you are a member, recommended that there be no amendments to this bill and recommended that it be passed. At the moment in the chamber we are going around in circles, and we are delaying the passage of important legislation that will ensure multinationals pay their fair share of tax in Australia.

The CHAIRMAN: The question is that the amendments moved by Senator Whish-Wilson on sheet 7796 be agreed to.

Stephen Parry (President) Share this | Link to this | Hansard source

There are some amendments that have not been dealt with, but I suspect they are not going to be proceeded with. Do any senators want to proceed with any further amendments? If not, the question now is that the bill as amended be agreed to.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted