Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

I inform the Senate that at 8.30 am today four senators each submitted to the President letters in accordance with standing order 75. Senator Gallagher proposed a matter of urgency and Senators Hanson, Hinch and Siewert proposed matters of public importance for discussion. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Hanson:

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

The need for multinational companies to pay tax.

Is the proposal supported?

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

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

Pauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

It is common ground that a large number of multinational companies operating in Australia do not pay any tax, whilst others pay very little. This situation is not new, and in fact this problem has been around for a long time. Liberal and Labor governments have done nothing about the problem for over 40 years and, in the meantime, profits made here in Australia have gone untaxed, causing Australia to go further and further into debt. Every Australian is now paying for the failure of governments to get multinationals to pay their fair share of tax.

Just a few hours ago the government voted against my proposal to deal with Lottoland Ltd, a multinational betting company located in Gibraltar, a known tax haven. That decision will cost Australians and the economy billions of dollars. If we can understand how we got to this position with multinationals we may have a chance to dig ourselves out of the problem. Successive governments, both Liberal and Labor, have become captives of multinational companies. They believe that if we ask these companies to pay tax they will leave Australia, jobs will be lost and the economy will spiral downwards, leaving everyone worse off.

Let us look at credit card companies like American Express, Visa and Mastercard. These multinational companies, owned by banks, are residents of tax havens. They pay little or no income tax. They provide a guaranteed payment to merchants and they recover the debt from the credit card owners. Credit card companies make money on the transactions in Australia and they make money on balances carried forward at the end of the month. Some people never pay, and they charge higher interest rates to mitigate that risk.

What would happen if the government found a way to make these multinationals pay income tax? Would these multinational companies pick up sticks and take their ball home to their tax haven? Or would they stay in Australia and make a bit less profit and pay tax? My view is they would stay in Australia. But, if they do not, there are plenty of alternative players around to fill the vacuum they would leave behind.

So what has stopped governments telling credit card companies they have to pay tax? The multinationals understand the fear of the government and they work it at every opportunity, telling them what the government needs to do to keep them in Australia. I said in my 1996 maiden speech that we must stop kowtowing to others. If we had acted then to deal with multinationals, we would now be in a stronger position as a country. The government proposes a progressive reduction in the company tax rate to 25 per cent, despite the widely held view that it will give foreign investors a windfall, while local employers, including small and medium businesses, will be worse off.

I want to turn now to the Business Council of Australia, the BCA, which represents some of the biggest multinationals in the world who also happen to be some of the biggest tax avoiders in the world. The BCA have been wandering the corridors of parliament, knocking on doors and selling their message that Australia needs to lower its corporate tax rate to 25 per cent or else the sky will fall in. Many members of the Business Council of Australia do not pay tax, and back in 1996, former Assistant Commissioner of Taxation Jim Killaly said that he estimated a loss from multinationals in Australia not paying tax of around $200 billion per year. Transfer pricing is another killer and a source of loss of taxes in Australia. When we have over 90 per cent of corporate Australia foreign owned, we are in dire straits in getting taxes out of these multinationals.

One Nation come to the issue of taxation with fresh eyes. We are not captives of the multinationals. Our feet are not tucked under the tables of billionaires with harborside mansions. We believe Australia as a nation can negotiate with multinationals for a fair outcome, and in government we would do so.

The United States, like other countries, faces the problem of multinationals not paying their fair share of tax. There is much debate in the United States about how this will be done. I understand the new President of the United States is looking at a lower tax rate, possibly 15 per cent, but on the basis that debt interest will not be deductible. The Democrats in the United States have recently introduced a new bill to deal with the ways multinationals avoid tax, and these include all the same tricks that are used here in Australia, because multinational tax avoidance tricks work in every jurisdiction.

One Nation believes that the time has come to stop being a hostage to multinationals. The world has changed, and it is time we changed the rules to fit the new game. If we do anything less we will be unable to fund our basic health, education and defence services and we will go further and further into debt. To think, even for a moment, that the only reason multinational companies trade in Australia is a function of tax rates is to misunderstand what we have to offer as a nation.

We are being sold short by this coalition government, as we have been sold short by the previous Labor government. It is time for the government to be brave and to say we will not be a hostage to multinationals any longer. If the government is willing to do that, we will hear some bold new initiatives in the May budget. If the government needs help, my door is open.

The government needs to learn from past mistakes. In 2009 Colonial Sugar Refining, CSR, sold its business to a Singaporean company. This multinational agribusiness operates in Australia through Wilmar Sugar Australia Ltd. In 2014 Wilmar reported a turnover of $1,567,605,050 but had no taxable income and paid no corporate income tax. We know the sale of these core sugar assets was a mistake because Wilmar are standing in the way of Queensland sugar growers selling their crop for a fair price.

The government needs to take into account tax compliance behaviour in making decisions about whether these multinationals can continue to operate here. It is a statement of the obvious, but no-one continues in business very long making no money or making losses. Still multinationals stay in Australia, and, year after year, we are asked to believe they make no money. Clearly something is wrong, and this has a name: it is called tax avoidance, and what we are doing is not working.

The government's response is predictable: it introduces another tax law. Today we are being asked to consider yet another lengthy tax law. This time we are being asked to agree to a law that will allow the ATO to tax diverted profits and to increase reporting and information exchange. This law, well intended, will make little difference to the conduct of multinationals. Recently the tax commissioner said he had the laws he needed to combat tax avoidance, but still tax avoidance goes on. Multinationals can outspend the government in every step of the process, including court action. If the commissioner is the farmhouse cat, then there are just too many multinational mice for him to chase. These multinational mice are willing to take the chance of being caught.

The government needs to think outside the box. Firstly, we suggest the government begin by withdrawing multinationals from the self-assessment system, so that the current onus of proof is reversed. This means that the ATO can raise a tax assessment and it is up to the multinational to prove otherwise. Secondly, multinationals need to be approached on an industry-by-industry basis, so that the business models can be better understood and the basis of taxation decided. Particular focus needs to be given to resource multinationals, including those with coal, oil and gas interests. The one-size-fits-all approach has not worked for the taxation of multinational profits.

The Australian Financial Review reports a tax case involving Chevron Australia, who in 2003 borrowed $3.7 billion from another Chevron-linked financing company. The interest rate agreed averaged nine per cent, making it unlikely any profit would be made in Australia on which tax would be paid. In a more recent development, a Chinese owned coalminer, Yancoal Australia, is buying coal assets from Rio Tinto. At the same time it is borrowing US$950 million from its parent company in Hong Kong. We hope this is not another attempt to shift profits offshore and pay no tax in Australia.

Of course, tax avoidance is not limited to multinationals. Origin Energy is Australia's leading electricity and gas supplier. But despite rising prices and a turnover of $12.2 billion, it did not make enough to pay tax in Australia.

The government must change the way it relates to multinationals. The new way of dealing with multinationals needs to include the way our Foreign Investment Review Board makes decisions. The board needs to take a more strategic and long-term view to stop selling our assets. Many countries— (Time expired)

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

I too rise to make a contribution pursuant to standing order 75 on this issue, a reinforcement of the statement of the need for multinational companies to pay tax. I suspect that almost all of the senators in this place would support that principle, making allowance for some of the recent debate—unless you thought the tax was an unfair tax, Senator Williams, in which case you would be encouraged to avoid the law and not pay your income tax, because that is the way you protest to have an unfair tax rule changed.

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

That's the Greens' way.

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

That is obviously the policy of the Australian Greens. Before I start on the substantive issue, I want to address a small reference Senator Hanson made in her speech. I do not believe she intended to leave the impression that this coalition government would, by act or omission, do anything to protect multinational companies from meeting their tax liabilities in this country. That is the position I want to adopt on that statement, and Senator Hanson can qualify or reject that at another time if necessary.

At the heart of a liberal society is people operating within the bounds of the law. On matters of taxation, on matters of how we operate our business, on matters of how we make a contribution to how our society operates, our government is generally by law and regulations. And taxation is no different. The laws in this space are relatively clear. There can be some complex aspects. But generally speaking you operate your business, you have inputs and expenditures, you calculate all of that and if you are left with a sum of money, known loosely as a net profit, you will pay a sum of tax in those circumstances.

I do think that, in this space, there is a belief that those who might make a great effort to avoid or minimise their tax liabilities to the lowest possible level, where it will have an impact on the economy, are generally within the larger corporate community, including many multinational companies. I do not think anyone denies any corporation or any individual the right to conduct their business and manage their affairs in the best way possible, not just to minimise their tax liabilities but to minimise all of their liabilities. That is how you operate a business. If you take your eye of that, if you ignore that, you will not be in business for long.

But it is unfair to say that this coalition government has ignored this issue. People like me have consistently spoken out against things such as transfer pricing; I find that an abhorrent practice. And I agree with Senator Hanson that it has quite a degree of prevalence. Particularly in and around agriculture, transfer pricing is occurring. It worries me that multinational corporations that are operating in our space—whether they own land or not—would exploit the chance to drive on our multibillion-dollar road networks to move soft commodities and freight and use our port networks and take advantage of the massive investment this nation has made and continues to make in matters of biosecurity. We have a very stable rule of law. We have civil jurisdictional relief. We are one of the most stable countries in the world in which to do business. We have a very low sovereign risk, and that is what appeals to many of the corporations and companies that come here.

The message is very clear. This government has already demonstrated its mettle in the space. It will not tolerate people who unlawfully avoid their tax liabilities. We introduced the multinational anti-avoidance legislation. You might remember that former Treasurer Hockey led a very advanced debate in relation to these areas when we hosted the main visitors from the Western world here in 2015. And there has been quite a bit pursued in this space since that time.

Senator Hanson made reference to the fact that this is impacting on our debt. Senator Hanson, I would have to say that that was one of the few things that I disagree with in your speech. What impacted on our debt was the absolute indolence and negligence of the Australian Labor Party when they were managing the economy of this country prior to a change of government. It was pink batts and school halls that impacted on the massive debt—hundreds and hundreds of billions of dollars—that we have got. And, of course, we have an environment where the structural deficits continue.

But, notwithstanding that, this law that was introduced has the potential just in this financial year to claw back $2 billion in tax. Remember, this was resisted by the Australian Labor Party. That is the sort of money that they would have left on the table with multinationals had we not introduced the legislation. Currently, the Australian Taxation Office, I am instructed, are quite aggressively pursuing those potential law-breakers. There are something in the order of 100 very, very significant audits underway, 70 of which are of multinational corporations. The diverted profits tax will commence on 1 July this year, and that provides a powerful new tool to the Australian tax office to tackle these contrived arrangements and uncooperative taxpayers.

This challenge is not just here in our country; this is a challenge across all of the developed economies. This is a challenge faced by many of our trading partners. Indeed, it is an international problem, and the solution therefore requires international cooperation and thinking. Areas such as tax havens, which do not cooperate with the likes of our Australian tax office, make it very difficult for matters to be investigated and prosecuted. These are people, in some instances, particularly with transfer pricing, who have developed some very, very exotic methods in order that they might avoid taxation. As a result, our government will have to visit, I think, some fairly exotic solutions to these problems. I know that one colleague has suggested that we start to look at a royalty on soft commodity exports so as to avoid any impacts on transfer pricing.

My message to multinationals and companies that are being clever with respect to their tax management is to tell them that this is a government that supports statements such as those put up by Senator Hanson that there is a need for multinational companies to pay tax in this country. If you do not want to do that, you should go and trade somewhere else. There are those of us in government, in the coalition—most of us, I would say—who are constantly thinking about the methodologies, constantly thinking about adjustments in legislation and practices, that can achieve this goal.

I have sent the message to Wilmar on a couple of occasions. It was a case provided by Senator Hanson. Wilmar ignored a number of us, thinking that we would not achieve outcomes. I think that, if Wilmar had had their time over again in these last two years, they would have behaved differently. They would have listened more intently to what we had to say, and I think we would have got a higher level of cooperation. So I say to the multinational corporate world: you just watch the Wilmar case. It is not over yet. It will send a clear signal to you of the commitment of this government to see that everybody supports the laws, particularly in the case of taxation. (Time expired)

Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

There has not ever been, I think, a more important time for multinational companies to pay their fair share of tax than there is now. Among a number of reasons, there is the fact that, if we look at Australia in 2013, our net government debt at that time was $184 billion, but Australia's net government debt is now $317 billion. That is a net debt increase by $113 billion since the coalition came into office. You would think that, with that growing net debt accumulated by this government, it would act on multinational tax avoidance and it would drop this ridiculous policy position of giving company tax cuts. But, no, that is not the government's approach. It is happy to let that debt continue to scale right out of proportion. It is happy to let multinationals get away with paying the bare minimum amounts of tax, if not none at all. It is happy to give company tax cuts over the next 10 years in the hope of some fantasy of trickle-down economics, all because it wants to attack everyday Australians in this country—everyday Australians trying to make ends meet. That is this government's approach to trying to bring down debt. That is this government's approach to public policy.

What an absolute shame, and what an absolute shemozzle. We have already had here today, on Harmony Day, the government choosing section 18C of the Racial Discrimination Act as the most important public policy issue that they want to prosecute on Harmony Day, a day that is all about everyone belonging. They want to water down our race-hate laws in this country rather than actually focusing on what is so important in this country right now, which is decent jobs, decent wages, decent education and health care. None of that is in the purview of the government. It is all about these kinds of strange issues that are led by the IPA or led by the conservatives that attack the very fabric of our nation, our multicultural society.

And now we have them attacking the very bread-and-butter workers of our country, hospitality workers. Some 30 per cent of Australian income earners are hospitality workers. They are in the bottom pay threshold in this country. With these changes that the government want to bring in to reduce penalty rates, they are the workers that will be most affected. Up to 700,000 Australians will receive a pay cut if these penalty rate changes go through, making them up to $4,000 worse off a year. If this is not a kind of nuanced Work Choices mark 2, I do not know what is. Of course, we need to also recognise that it is women that make up over 50 per cent of hospitality and retail workers. Penalty rates are not a luxury. Penalty rates are there for what they need to pay their bills and put food on the table—something that our Prime Minister, unfortunately, is completely out of touch with. I am sure he does not even know where his Medicare card is.

These are the issues that make this country so important and so successful as a nation: having decent pay and conditions and having our safety net for health care, Medicare. These are the bread-and-butter things, as I call them, that this government wants to attack, instead of attacking the taxes that should be paid by those massive companies that earn those massive profits each year, a lot of which end up going offshore and not staying in our country.

There was a time when we had a Treasurer who was Mr 'Budget Emergency'. He has now moved to Washington DC. He has gone and now we do not talk about debt. The government does not want to talk about debt. Why? Because it has escalated out of control. It no longer claims that it matters. It put a $50 billion corporate tax cut on the table when it went to the election, knowing full well the government's debt position since coming to office had increased by $113 billion.

Modelling done by Independent Economics says that the corporate tax cut is going to cost around $48.2 billion—slightly shy of $50 billion—and that its annual cost will be $8 billion a year. That is a massive hit to the government's budget and the government's coffers. So, of course, they are going after family tax benefit. Of course, they are going after Newstart allowance. Of course, they are going after penalty rates. How else are they going to pay for this massive $8 billion a year corporate tax cut? The ideology of this government astounds me. The fact that they can pick on everyday Australians in this way is abysmal. Yet that is what we have on the table.

Now, in some kind of pathetic attempt, the government are trying to address the issue of child care. Both sides agree that child care has got too unaffordable and it needs to be addressed. Instead of looking at child care as a policy issue on its own, no, this government want to ties it to family tax benefit. It says: 'Let's cut family tax benefit to pay for child care. Let's not touch the multinationals. Let's not touch the corporate tax rate policy that we have in place'—the $8 billion a year that they want to give to corporates—'Let's actually look at low-income Australians, families who are trying to make ends meet, and take a little bit of their money away from them. Take a little bit of money here, take a little bit of money there, a bit of penalty rates and a bit of family tax benefit.' They try and come up with a childcare policy in that way.

On top of that, what do we have? Scrapping the energy supplement is another one. Five weeks wait for Newstart allowance is another one—forcing young people to live off nothing for five weeks before they can access their income support. That is not the kind of Australia that Labor want people to live in. We believe in equality. We believe in fairness.

I thought it was a slightly bizarre slogan at the last election, nevertheless a slogan, that the Prime Minister chose to adopt. Remember 'Jobs and growth'? We heard it a million times. It was on billboards and the like. He tried the Abbott-style slogan approach with 'Jobs and growth'. Do we hear about 'Jobs and growth' anymore? No, we do not hear about it. We hear about cuts to penalty rates, watering down race hate laws and giving massive corporate tax cuts. That is all we hear about. We do not hear about jobs and growth. Whatever happened to that? it has gone out the window, like so much of the Prime Minister's beliefs. Beliefs on climate change, beliefs on marriage equality—it has all gone.

Unfortunately, this Prime Minister, as former Prime Minister and a great Prime Minister Paul Keating called him, has been an absolute 'fizzer'. It is so disappointing that someone with the intellect and, you would think, the business aptitude and the political experience of Prime Minister Malcolm Turnbull would actually want to make a mark of some type during their time in parliament and mean something—something based on what we all thought in this nation that Malcolm Turnbull believed in. Well, that has all gone and instead what we have is this attack on everyday Australians which Labor simply cannot support.

We cannot support a cut to a company tax rate when the Liberals and the Nationals have so badly increased debt in this country—from $184 billion to $317 billion, as currently project in MYEFO. That is a near doubling of Australia's government debt. That is why there is a need now more than ever for multinational companies to pay their fair share of tax. It is so unfair to take away from everyday Australians, the majority of Australians who are trying to make ends meet, and let these massive companies get away with murder. It is absolutely disgusting and the government needs to do something about it.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

It is a bit rich to be lectured at by a senator from the Labor Party. When in government, they inherited not only a surplus in 2007 but about $40 billion in the bank, and they passed over a debt of $200 billion. We know we are having to borrow offshore $400 million a day—$1.2 billion a month—to repay Labor's debt.

Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Link to this | Hansard source

What about the global financial crisis?

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Don't talk to me about debt.

I do agree with Senator Hanson-Young, as everyone else does, that it is only fair that multinational companies pay their tax. But it is interesting that that $2 billion a year that the tax commissioner thinks multinationals are not paying is about six weeks interest on Labor's debt from 2007 to 2013. In a speech the taxation commissioner made on 16 March, he really advised us where the real figures lie. He said, 'Yes, it's probably the case that multinationals are avoiding about $2 billion a year in tax and I will tell you how this government is working to make sure they pay the lot.'

But the taxation commissioner said that it is average Australians who are actually costing the budget about $19.7 billion in claims they should not be making for work-related expenses. He said that is by far and away the largest component. He said the second biggest component is:

… a willingness on the part of ordinary Australians to ignore the tax evasion implicit in paying cash for a kitchen renovation or cheap meal.

So $24 billion to $25 billion each year is lost to the Australian economy as a result of people willing to participate in the cash market. His projection is it is about $2 billion a year. Tax Commissioner Jordan said:

Getting every single dollar out of multinationals and large corporates is not going to make a dent.

The biggest of all is individuals, wage and salary earners, claiming work-related expenses. So that's what we've actually got to focus on—

in this country.

It is interesting that Senator Singh came into this place and criticised the coalition government, because in 2015, when the Turnbull government introduced the multinational anti-avoidance law, which I will refer to as MAAL—a piece of legislation expected to claw back about $2 billion under its crackdown on multinational tax avoidance this year—where was the Australian Labor Party? It is a shame Senator Singh is not here to answer the question. Because the Labor opposition opposed it, we required the support of the Greens political party to get that legislation passed. Labor were very happy to allow the multinationals to continue to avoid paying that tax. It is interesting that they have some chance of redeeming themselves—

Senator Dastyari interjecting—

Senator Dastyari, this time around. This year the Turnbull government has introduced the Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017. It gives the Labor opposition the opportunity to realise their sinful ways and, in fact, this time around to support that legislation. It is nowhere near as effective as the MAAL legislation, which this year will claw back about $2 billion, but at least the new combating multinational tax avoidance bill will yield some hundreds of millions of dollars.

In the time available to me I will make a few points about who pays tax in this country. Who are the two biggest taxpayers in this country? Are they the banks? No, they are not. Are they the insurance companies? No, they are not. As Senator Smith knows only too well, the two biggest taxpayers in this nation come from our home state of Western Australia. By a country mile is BHP Billiton, which paid in 2014 some US$4.9 billion. That was two years ago, so it is probably closer to $6 billion now. When royalties and the resource rent tax are taken into account, BHP Billiton paid more than $8.7 billion, more than A$10 billion at a rate, if you do not mind, of some 45 per cent. As the minister for resources would know, the contribution by the big resources company is massive—US$8.7 billion. I will go to Rio Tinto. In 2015 Rio Tinto paid in Australia US$1.5 billion in tax and $1.4 billion in government royalties to either federal or state government entities. Rio Tinto and BHP pay their fair share.

I listened to the comments made by senators in this place. Once again it is important to understand how misinformation can get out. Regrettably, it was the then member for the Pilbara, Mr Brendon Grylls, who jumped on the figure of 50c a tonne for iron ore in Western Australia and invited the entire Western Australian community to believe that the only figure paid per tonne of iron ore by the two majors, BHP and Rio, was 50c. Well, here are the facts. In fact, enough people in the Pilbara must have believed him, because Mr Grylls is no longer the member for the Pilbara. Those two companies pay about $18 per tonne for iron ore, not 50c a tonne. Of that $14 is tax, about $4.50 per tonne is paid as a royalty depending on the price and, lo and behold, at the bottom of it all is a figure of 50c. So what did Mr Grylls do? He grabbed hold of the 50c and conveniently forgot the $17.50 and ran the line that the only figure that BHP and Rio Tinto pay is 50c a tonne. The community of Western Australia has spoken and have a very good idea on Mr Grylls's contribution. It was his own electorate that voted him out the other day.

I will go to other multinationals that seem to be the subject of a lot of scrutiny: Chevron and its partners on Gorgon and Wheatstone on the North West Shelf—Gorgon on Barrow Island and Wheatstone near the town of Onslow. Here are some figures just to alert you to the value of multinational investment in this country. Some $60 billion—not million; $60,000 million—has been paid of local content to the Australian economy in the construction phase of the Wheatstone and Gorgon projects to date. Over the 30-year life of Gorgon and Wheatstone, it is predicted that there will be a contribution to Australia's GDP of over $1 trillion, more than 150,000 full-time equivalent jobs and $340 billion to federal government revenue. Already in the town of Onslow—which, as Senator Smith and I know, is just a small regional town—some $250 million of social infrastructure has gone into Onslow.

So this is the level of investment. Is there anything else in Australia like this? A hundred billion dollars has been invested by Gorgon and their partners in those two projects. Let me put US$100 billion into perspective—that is A$130 billion. If the Snowy Mountains scheme were built today, it would be a A$9 billion project. Contrast that with A$130 billion in just two projects alone, as Australia goes to being the biggest LNG exporter.

You will hear commentary on the petroleum resource rent tax. Remember: that is a super profits tax, on top of the normal taxes paid by multinationals. You should know that better than anybody.

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

I rise to make a contribution in respect of the need for multinational companies to pay tax. I think it is good that this matter has been brought to the chamber for discussion today. It is, of course, something that many Australians feel very strongly about. As I get around in the state, very often people will talk to me about a range of issues, but they will generally raise this concern that they have about gigantic companies operating in Australia and making significant profits but then the Australian community not getting the benefit of the fair share of taxation that flows from that.

In the chamber today, I note that Senator Dastyari is here. As the former chair of the Senate Economics References Committee, he has done some extremely good work. I also acknowledge former Senator Milne for her efforts in shining a light on this issue. So we can be proud of the efforts of this Senate in addressing this issue and in attempting to do the work that the community expects of us in highlighting the problems associated with multinational tax avoidance.

But I must say that, in a desperate effort to distract attention away from its $50 billion tax cut to large companies, including the big banks, this government is pretending that it is serious about reducing multinational profit shifting. As chair of the Senate Economics References Committee, I have spent a great deal of time wading through large amounts of information and published reports that need to be looked at. Despite my best efforts and the efforts of the Labor Party and others in this place, and the efforts of some of Australia's most prestigious journalists, the government continues to have a soft touch when it comes to multinational tax avoidance. As usual with this government, you have to follow the numbers and not the spin. The coalition's attempts to tackle multinational tax avoidance, such as the diverted profits tax, will raise just $200 million over the forward estimates. When it was announced in the 2016 budget, Labor signalled that we would support the diverted profits tax, and we welcome any coalition attempts to close loopholes, no matter how small.

To his credit, the Treasurer, in a mad scramble, just scraped in on his own deadline for releasing the diverted profits tax draft legislation before the end of last year. After all, in mid-November Treasury officials had told the Senate estimates that the legislation was yet to be drafted, but since then the government has done some tweaks, most of them behind closed doors. In the lead-up to the 2016 budget, the government appears to have backgrounded journalists about possible changes to the safe harbour thin capitalisation provisions for multinational debt deductions—namely, a lowering of the current 60 per cent threshold to 50 per cent, which appears to have been pulled at the last moment. In stark contrast, Labor went to the 2016 election with a plan to close debt deduction loopholes exploited by multinational companies. Our reforms would deliver $1.6 billion over the forward estimates and $5.9 billion over the decade.

If the government were serious about getting tough on multinationals, they would do something about the one in three big companies that pay no tax. The most recent 2014-15 tax office tax transparency data shows that more than one in three large firms pay no tax. This includes 109 companies that paid no tax despite reporting more than $1 billion in total income. This transparency data report, covering 1,904 companies in total, is only available thanks to Labor's tax transparency laws, which passed the parliament in 2013 over the objections of the coalition. The Liberals and Nationals voted against those laws at the time. A little while later, they voted with the Greens to water down Australia's tax transparency laws, taking two-thirds of private companies out of the reporting net. Comparing the most recent figures for the tax year 2014-15 with data for the 2013-14 tax year shows that the share of large firms paying no tax has stayed unchanged, at 36 per cent in both years. This points to the coalition's failure to crack down on multinational tax avoidance. Labor led the way on tackling multinational tax avoidance under the Gillard government, in the face of blanket opposition from the coalition, while the coalition government has had to be dragged into action.

Over 3,000 Australian Taxation Office jobs were slashed under the Abbott-Turnbull government, undermining enforcement ability and losing institutional knowledge. Back in 2015, coalition MPs cheered when former Prime Minister Tony Abbott told parliament:

So far the only idea they—

the Labor Party—

have come up with is to spend $100 million on the ATO to raise $1 billion. Well, next time they will be telling us to spend $1 billion on the ATO to raise $10 billion. That is the problem. All they can think of is spending more and taxing more.

Yet in the 2016 budget the government did precisely that, claiming that a $679 million investment will raise more than five times as much, $3.7 billion. If this is true, it must also be the case that the government's savage cuts to the tax office, axing over 3,000 jobs, have cost revenue over the past few years. Promising to restore some of the tax office's funding in this budget is an admission of failure, not a new crackdown on multinationals.

The difference between Labor and Liberal could not be starker. We will put people first, while the 2016 budget has shown that Mr Turnbull and the Liberal Party will look after high-income earners and multinationals. The government has seriously mismanaged the budget. The recent mid-year budget update has confirmed Mr Turnbull's and Mr Morrison's economic plan is in tatters, leaving Australia's gold-plated AAA credit rating at real risk. The figures confirm that debt and deficits are continuing to blow out at the same time as the economy is shrinking and full-time jobs are disappearing. Net debt has blown out to an estimated $317 billion since the Liberals took office, up from $184 billion when they took office. Deficits over the forward estimates have blown out by another $10 billion. Since the first budget, the budget deficit for 2017 has blown out tenfold from $2.8 billion to $28.7 billion. The projected surplus in 2020-21 has shrunk and is now wafer thin, leaving us in the danger zone when it comes to the AAA credit rating—a weakening economy that has delivered more than $30 billion in revenue write-downs.

Yet the government refuses to drop its $50 billion tax handout to big business. Mr Turnbull's great big economic plan has been exposed for the laugh-out-loud farce that it is. Their own modelling suggests that a company tax cut, funded by higher personal income taxes, will raise household income by just 0.1 per cent in the mid-2030s. Household income gain of 0.1 per cent is equivalent to about one month's income growth. Whilst handing over an easy $50 billion to large companies, Mr Turnbull is smashing household budgets today through his cuts to Medicare, schools and family payments. The Turnbull government's company tax handout could also put Australia's AAA credit rating at risk, which could smash family budgets by putting up mortgage payments.

There is a complex web of tax avoidance amongst many of the major corporations and we need to deal with that. One look at it is not enough; we will always need to be vigilant and always need to be on top of corporate tax. Here we have Mr Turnbull cutting penalty rates and offering up a tax cut to some of the biggest corporations in the world when they are not paying their fair share of tax at the moment.

The evasiveness of multinational company executives who fronted the corporate tax avoidance inquiry, particularly from the pharmaceutical and tech industries, left the impression that they have something to hide. I think the effective level of tax of some of the pharmaceutical companies was of the lowest order amongst the multinational companies. It is clear that some multinationals will go to extreme, even absurd, lengths to conceal their tax minimisation practices. The audacity of certain multinationals in refusing to comply with legitimate and reasonable requests for information leaves me with reason to suspect that the current framework for tackling multinational tax avoidance needs significant improvement. The unwillingness of many multinationals to openly discuss their tax arrangements underscores the need to establish mechanisms to increase transparency. Effectively, companies that do not have standardised pricing across the jurisdictions can charge whatever the market will bear and then back out the profits through transfer pricing. Allowing multinationals, in effect, to arbitrarily attribute value between countries provides them with opportunities to price gouge Australian consumers while, at the same time, reducing the tax liabilities of their Australian subsidiaries.

Perhaps the most reckless parts of the government's inability to combat multinational tax avoidance are their false attempts at true reform. I would strongly encourage the government to adopt Labor's broad selection of reforms, as outlined in our policy agenda.

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

We should all pay our fair share of tax: I think everyone in here agrees on that. With a progressive tax system in Australia, it is only fair that low-income Australians pay a lower rate of tax than high-income Australians or wealthy Australians who pay a higher rate of tax. That is what the basis of a progressive tax system is. The Greens would obviously like to see higher income Australians taxed at an even higher rate. We have had policies in place for a buffer tax and a millionaires' tax and we have opposed tax cuts to wealthy Australians.

While we have this matter of public interest from One Nation today, let's be very clear: in this 46th Parliament, the Labor and Liberal parties, along with One Nation, supported tax cuts to the wealthiest 20 per cent of Australians. While the Greens thought that was disgusting and a sellout of the battlers that One Nation purport to represent, we do agree with One Nation today on the simple proposition that multinational corporations are not paying their fair share of tax. In fact, we can especially agree on the fact that it is not fair for some of the biggest and most profitable companies in the world to pay no tax at all. In fact, by coincidence, it was just reported in New Zealand today—and I am sure Senator Dastyari is on it, because he has been tax watcher for some time—that Apple have paid no tax—

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

Shame.

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

in New Zealand for the last 10 years. What a surprise! We discovered the same thing here in Australia. We are in this situation where we have large companies that need to pay their fair share of tax.

Interestingly, Mr Chris Jordan, the head of the Australian tax office was talking about tax avoidance and cracking down on it in a speech last week and said:

The sentiment in Australia is very strong in this regard. The stories and coverage of…base erosion and profit shifting related issues over the past couple of years have led to unprecedented levels of interest in the tax behaviour of large corporates, especially multinationals.

As a result, the new multinational anti-avoidance law, the MAAL, was introduced—

last year and now we have a diverted profits tax, or what is commonly called a 'Google tax' about to come to parliament.

I would also like to put on record my thanks to former Senator Christine Milne who was the Leader of the Greens and who initiated the multinational tax avoidance inquiry in 2013, which led to a large number of inquiries on this subject over a long period of time and which have, of course, snowballed. Thanks to the good work of the Senate, this public sentiment—also driven by a large number of stakeholders, particularly stakeholders like the Tax Justice Network and others who have campaigned on this issue for decades—is finally bearing some fruit. So for One Nation to come in here and say that nothing is being done on tackling the issue of multinational tax avoidance is actually incorrect. In fact, it is so they can set themselves up to look like they have delivered something—an actual policy, a real policy—when in fact, this parliament is actually getting on with doing the job.

Saying that, there is still an absolutely long way to go. The hundreds of millions that might be raised by the legislation about to come to this parliament is nothing on what is needed to raise revenue in this country. It goes nowhere near covering a $40 billion tax cut that we are about to give to corporations. There is much more we need to do in this country to raise revenue. It all about revenue. We need to make sure the petroleum resource rent tax is fixed and, unlike Senator Back, I do not necessarily believe that BHP, Rio Tinto and Chevron—three corporates pinned in our inquiry for not paying enough tax—are actually paying their fair share. (Time expired)

Derryn Hinch (Victoria, Derryn Hinch's Justice Party) Share this | Link to this | Hansard source

On Fran Kelly's program on Radio National this morning, I was asked about my position on some aspects of the Social Services Legislation Amendment (Omnibus Savings and Child Care Reform) Bill 2017 and some of the cuts that I would not agree to—cuts to some of the payments to single mothers and to pensioners and other welfare cuts that the government plan. When I spelt it out, she said, 'How is the government going to pay for it if you and other crossbenchers won't go along with that?' I said, 'Let's dig into the so-called Google tax. There's plenty of money there. Get the money from Google.' I notice that the Treasurer, Mr Morrison, has claimed that we will have with the Google tax, as it is colloquially known, the toughest laws in the world to fight multinational tax avoidance. I hope that is true. I hope that happens. He has been talking about having 40 per cent tax penalties for multinationals who do not play the game. I hope that is true. We are told the ATO is going to finally concentrate on the multinationals' tax avoidance. We hope that is true too. As we have just been told by Senator Whish-Wilson, it was Christine Milne five years ago who instigated the Senate inquiry.

Finally, billions of dollars that the government need to find for their commendable change to childcare funding here can be found from these multinational companies, and I hope it happens. Senator Hanson spoke about the Lottoland scandal this afternoon. I hope that, if Lottoland are not paying a fair amount of tax, they will be gone after too. Senator Whish-Wilson mentioned Apple in New Zealand. I had to laugh when I heard on the news: 'It has been found out that Apple in New Zealand haven't been paying their money there. With all their profits, they have paid no tax because it's all been going to Australia.' That sounds great! So we get it? No, we do not. It goes to Ireland. It does not come to Australia. It may pass through Australia, but it ends up in Ireland, because the Irish government did an Irish game and said— (Time expired)

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

I rise to speak on today's matter of public importance, which is the need for multinational companies to pay their fair share of tax. The government's bid to combat multinational tax avoidance is only a token action. The government must put tax reform back on the table and be prepared to consider reforms that have the capacity to make a real difference to the budget without making cuts to 99 per cent of the population. The government can start by looking at a financial transactions tax, a tax between 0.01 per cent and 0.1 per cent—and I am being very conservative here; I could raise it—applied only to six high-frequency share-trading companies. This tax is likely to raise, conservatively, $1.4 billion a year at a minimum, without taking money from Australia's pensioners, families, students and jobseekers. A 15 per cent death tax on estates worth more than $5 million would raise $5 billion a year and would only impact the top 0.8 per cent of Australians. A cap on capital gains tax exemptions for houses worth more than $2 million would raise $3 billion per year, and 56 per cent of the revenue raised would come from Australia's top 10 per cent of earners.

These things have all been costed independently. They have come from the Australia Institute. And what do you know? The Treasurer and his ego will not even look at them. Being conservative, we can raise $10 billion in a year. The government is struggling to balance the budget, because it is taking crumbs from the people in Australia who need them the most. A government that takes $50 a fortnight from pensioners or families has completely wiped out their budget for power, or the funds they have stored away to cover insurance or groceries, let alone put milk on the table. But the economic and tax reforms I have mentioned here are a drop in the ocean in terms of wealth held by the groups targeted. All I am talking about is hitting, mostly, one per cent of the top-earning Australians and their companies in this nation, and we can leave our pensioners alone finally. (Time expired)

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

Debate has concluded on this matter of public importance.