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

I move:

That the Senate take note of the document.

It is extraordinary that in a week where we are still squabbling over tens of millions of dollars in revenue raising from backpackers, some of the lowest-paid workers in this country, the Australian National Audit Office releases a bombshell report—and I do recommend that all senators read it—saying that oil and gas companies may have wrongly claimed billions of dollars in tax deductions and therefore robbed the Australian people and this government, in its obsession with balancing budgets and deficit repair, of hundreds of millions if not billions of dollars in revenue.

Report No. 28 of 2016-17—Performance audit: collection of North West Shelf royalty revenue: Department of Industry, Innovation and Sciencefinds that oil and gas companies using loopholes may have wrongly claimed up to $5 billion in deductions. It has found that the royalty formula has not been reviewed on these deductions for nearly 17 years and that a number of deductions, worth billions of dollars, claimed by companies, are not allowable under the act. This is something I have asked the Australian Taxation Office and the Treasury about several times. In fact, at the last three estimates I have asked about exactly these issues—about what is and is not allowable. It really shows you where this government's priorities are. The government is not prepared to look at this low-hanging fruit—what is essentially multinational tax avoidance. Instead, it wants to chase some of the lowest-paid workers in this country, foreign backpackers, who are here to have a holiday and pitch in and help our local agricultural producers, who desperately need their labour. The government is prepared to put our local agricultural production at risk to save a few pennies for Scott Morrison's obsession with budget repair. The issues raised in this report have been raised so many times, yet nothing is ever done about it.

The report shows that more than $5 billion worth of deductions were claimed against petroleum revenues just in the 18 months to December 2015. These deductions were claimed under the broad categories of operating costs, depreciation, costs of capital, depreciated asset disposal, crude oil excise, condensate excise, processing tariffs and joint venture participation costs. Any costs that are claimed as deductions—for example, by North West Shelf operators—reduce the amount of royalty that is payable to the Australian people. The federal Department of Industry, Innovation and Science relies on the Western Australian Department of Mines and Petroleum's, or DMP's, compliance work and does not undertake any further activities to gain assurance that only eligible deductions have been claimed. So, in this instance we rely on the Western Australian government to do limited audits, and the Australian government has provided no oversight.

The royalty scheme does not permit all the deductions currently being claimed. On this basis, ANAO has doubts about the eligibility of deductions claimed for the costs of debt- and equity-funded capital, excise paid on crude oil and excise paid on condensate. The ANAO also found that there has not been adequate scrutiny of claimed deductions. Specifically, as I mentioned before, it has been 17 years since there has been an audit of North West Shelf operators and how they can actually pay a royalty and do their calculations. There have been recent reviews by DMP of cost reductions, but this work has involved quite limited testing, and there has been no major comprehensive examination since 2006. The limited work that has been undertaken has nevertheless highlighted potential problem areas, which I would urge senators to consider, but little action has been taken in response to these findings.

More recently, the Western Australian government commissioned consultants to undertake some data analysis procedures on capital and operating expenditure by North West Shelf producers that were also quite limited in scope has also provided some valuable insights. The report's findings indicate that there is a risk of significant errors in the claiming of deductions. To date there has been an agreement that a net amount of $8.6 million in royalties has been underpaid, requiring adjustments, but this is just the tip of the iceberg.

To put it in a nutshell, to finish off, I question our priorities. We are going after backpackers, who earn on average $14,000 a year. The companies in this report earn billions of dollars. They are some of the biggest companies in the world, operating in the North West Shelf. And it is clear that the rules, the way they are written at the moment, allow these companies to make tax deductions that they should not be making. That is money we need for schools, hospitals and policing in this country. The Greens will be taking this a lot further and putting this issue under the microscope.

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

I am glad Senator Whish-Wilson raised this issue. It is an important issue. If his interpretation of the Auditor-General's report is correct then it is something the government should very closely look into, and I am sure the government will. I would be very interested to read the government's response to the Auditor-General's report. Senators may recall that, after years of doing nothing and six years of the Rudd-Gillard-Rudd Labor government, supported entirely by the Greens political party, there was no move at all to try to get foreign companies to pay the tax that they should pay in Australia. There was not one skerrick of movement from the Labor-Greens administration in six years. Fortunately, the government changed, and we had treasurers who seriously looked into these issues, who took a lead role in the G20 meeting in Brisbane and who started work on this on a worldwide basis—work that will help in not only Australia but many other developing countries experiencing the same sorts of problems. I give all credit to Mr Hockey, who was then the Treasurer, for the work he did in getting foreign multinational companies to pay their fair share of tax. The Greens and the Labor Party talked about it a lot but did not do one thing to address the problem. So I look forward to the government's response to the Auditor-General's report.

I also want to comment on Senator Whish-Wilson's throwaway line: Mr Morrison is just trying to get a few tens of millions of dollars—actually, it is hundreds of millions of dollars—from the foreign workers, the backpackers. I could never understand why Senator Whish-Wilson, Senator Lambie and the Labor Party seem to think that foreign workers should pay less tax than Australian workers. The great workers' party, the Australian Labor Party, want to charge backpackers 10½ per cent and Australians much more than that. We know that, at the 19 per cent rate proposed by the government, backpackers will still get a better deal working in Australia than they would get anywhere else.

Senator Whish-Wilson's throwaway line is that Mr Morrison wants to get a few tens of millions of dollars. As I said, it is hundreds of millions of dollars. You know why we need that? You know why we need to look at the budget bottom line, Senator Whish-Wilson? It is because you supported the Labor Party, who ran up a debt approaching $700 billion, which means Australian taxpayers are paying something like $30 million a day in interest on money borrowed by the Labor-Greens government to fund their outrageously lavish projects in that six years of the Rudd-Gillard-Rudd government. When you say it is about trying to recoup a few tens of thousands dollars, we have to do that because—these figures just roll off everyone's tongue, even mine these days—it comes down to money that Australian taxpayers have to pay. They have to pay $30 million a day—$300 million a week—in interest on the money that was borrowed by the Labor-Greens government in those horrible six years.

That is why we have to try to address the budget problem. It is not just a problem of governments. I always say to people who ask me to get the government to give them some money: 'The government doesn't have any money. It just uses your money—taxpayers' money.' When we talk about paying $30 million a day in interest, it is not the government's money, it is the taxpayers of Australia who have to fork out that. Imagine what we could do with $300 million a week in new hospitals, new roads and new schools if we were not paying off the interest on Labor's debt to foreign lenders. While this is an important report, my final judgement will wait until I see the government response.

Question agreed to.