Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise to speak to the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. There is an extraordinary situation in this country where one in three big corporations pays absolutely no tax whatsoever. By 'big corporations', we are talking about corporations that have revenues of over $100 million. Let's be clear about this: one in three of the corporations that have revenues of over $100 million in this country pay absolutely no tax at all. On the latest figures, that is over 800 corporations. It is actually 816 corporations who have revenues of over $100 million and pay absolutely no tax whatsoever.

Let's put that another way. A single, aged-care worker pays more tax than 816 big corporations in Australia, each and every one of which has revenue flows of over $100 million. Let's put it another way. One nurse in Australia pays more tax than 816 corporations, each and every one of which has revenues of over $100 million. I'm not talking about it collectively. I'm talking about one aged-care worker or one nurse paying more tax than any one of the 816 big corporations in this country with revenues of over $100 million, because, of course, the facts are that there are 816 big corporations in Australia, each and every one of which has revenues of over $100 million but pays absolutely no tax whatsoever. The share of the Australian economy going to corporate profits has never been higher than it is today, and the share of the Australian economy going to workers has never been lower than it is today. The corporations are making off like bandits, and Australian workers are paying the price. The corporations are raking in billions of dollars in profits every year while Australian workers are watching their real wages go backwards, as they have been for many years now. This is a massive public policy failure, and it needs to be corrected.

This bill, unfortunately, isn't really going to do the job. It is largely focused on one method of tax evasion, which is debt shifting, and unfortunately the government has placed a multitude of loopholes into this bill so that corporate accountants can work around it. Believe me: the corporate accountants will be able to work their way through these loopholes in their sleep. The reason the government has put these loopholes in the bill, the reason Labor has put massive loopholes into a bill that purports to strengthen multinational tax compliance, is that those were their marching orders from the top end of town. It's the same reason Labor won't support divestiture powers in this country—because the top end of town, the big corporations and the BCA have given them their riding instructions. It's the same reason that, after a full consultation process around merger law reform in this country, Labor is going to put forward a pathetically weak proposal. The BCA and the big corporations are the puppeteers, and the Australian Labor Party are the puppets.

Before going into the details of the bill, I want to give a massive shout-out here to the one industry that stands head and shoulders above all others when it comes to avoiding tax in Australia. That is, of course, the gas cartel. Oh, my goodness, what a terrific job they do at avoiding tax in this country! I congratulate the gas cartel for their ruthless exploitation of Australian tax laws, for their tax-dodging activities, for the amount of time and effort that they put into avoiding their tax responsibilities and for the amount of time and effort and political donations they put into dictating to the two major parties in this place, the political duopoly, to ensure that tax laws in this country are not written on behalf of the Australian people and are not written on behalf of the many millions of Australians who go to work and work hard every day and pay a significant amount of tax but instead are written to benefit the gas cartel, who are the tax avoiders par excellence in this country. It's absolutely unbelievable.

Interestingly, the ATO has done a remarkable job in clawing back billions of dollars through their Tax Avoidance Taskforce, with $6.4 billion in additional revenue this financial year. Remarkably, $4.4 billion or about 70 per cent of what the ATO has clawed back has come from dodgy tax-avoiding gas companies. The ATO has labelled the gas industry in Australia as 'systemic non-payers of tax'. That is not the Greens saying that; that is the ATO saying that. That's why we've circulated an amendment that will improve transparency around which gas export projects are sitting on billions and billions of dollars of PRRT tax avoidance credits.

It is astounding, colleagues, and let's never forget it, that, when the Labor Party in government put forward two options to reform the PRRT and went out to consultation, the Labor Party landed on option 3 of two, with option 3 being the one that they were instructed to land on by the gas cartel. That's what we're dealing with here. The cartel reaches its power and influence into this place, and there is no political party—and I say this advisedly—that is more open to being instructed by the gas cartel on how to behave than the Australian Labor Party. We know how many Labor ministers and Labor politicians have rolled out of this place and onto the boards of companies like Woodside and Santos, and I confidently predict that the current resources minister, Ms King, will end up on the boards of Woodside and Santos within 10 or 15 seconds of leaving this parliament. I confidently predict that, and I challenge anyone to demonstrate to me, given the history of the revolving door between the Labor Party and the gas cartel, that that will not be the case.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator McKim, I just thought about your words, and I think you have actually cast an aspersion. None of my colleagues have jumped up and down, and Ms King isn't in this chamber to defend herself. You know me; I go with the flow, but I'd probably seek your support to just maybe withdraw that comment about Minister King when she leaves here. I'd ask you, Senator McKim.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

You are a fair man, Acting Deputy President; I'm sure all your colleagues would agree. I withdraw those comments.

Gas companies are cooking our planet. They are literally rendering it uninhabitable for human life. They're failing to pay a fair share of tax. They shift their profits offshore. They avoid paying super profits tax, and many of them are only now starting to pay company tax after the ATO beat Chevron in the High Court in 2017 regarding Chevron's practice of shifting large amounts of debt onto their Australian companies. Let's be very clear about this: the multinationals who own and operate so much of the gas cartel in this country are running rings around Australia's tax law. They are using every trick in the book, and the Labor Party has no interest whatsoever in calling them to account and ending those practices. The ATO's court actions have in many ways already corrected the more egregious debt-shifting behaviour of the gas companies.

This bill implements a policy that both the Greens and the Labor Party took to the election: to limit the tax deductions that global corporations can make when they lend themselves money, which is what goes on all the time. Lending yourself money is an absolutely basic and fundamental strategy of tax dodgers. It's been made famous by gas companies in Australia who borrowed money from their parent company at a rate well above commercial rates—let's say 10 or 11 per cent—so that all the profits made in Australia are whittled down to nothing while the parent company, which is often miraculously based in tax havens like the US state of Delaware or Ireland or the Netherlands, makes extraordinary profits, which are of course not taxable in Australia. We all know how this stuff works. The difference is that some of us are prepared to stand up, call it out and take it on, but most of us are not. By shifting the test from assets to income, this bill implements the OECD's base erosion and profit-shifting program. However, quite predictably, the government has selected the weakest end of the range recommended by the OECD at 30 per cent of earnings before interest, taxes, depreciation and amortisation.

Another time-honoured tactic of tax avoiders and tax dodgers that isn't covered by this bill is the use of price misallocation, where, instead of related companies providing loans to themselves, they sell the product to themselves. Rio Tinto made the Singapore sling famous by selling Australian minerals to their own marketing hubs based in low-tax jurisdictions. The profits, of course, accrue then to the marketing company, while the Australian extracting company miraculously fails to turn a profit.

There is also a massive loophole being inserted into this bill by Labor that undermines the entire purpose of changing the test. Companies will be able to carry forward any deductions over that 30 per cent that I mentioned earlier into future years—for 15 years! In other words, the bill isn't actually going to stop excessive deductions; it is just spreading out the time that that tax avoidance can occur over many years. So to say that this bill doesn't meet the Greens' expectations is putting it mildly—and that was before Labor amended it late last year to further weaken those carry-forward debt deduction rules and reduce the power of the ATO to deny corporate deductions that are not made for valid commercial reasons. What an absolute shambles this is. What a clown show this Labor government is. What a bunch of patsies to the big tax-dodging corporations and the gas cartel this Labor Party is.

I do want to acknowledge there were some improvements in the government amendments to support investment in large renewable energy projects as well the plantation industry. That will obviously be a necessary part of ending native forest logging around the country. This gives me an opportunity to acknowledge the absolutely incredible work done by my friend and colleague Senator Janet Rice. She has been a key part of the campaign, along with activists around the country, to end native forest logging in Australia. She's an awesome voice for voiceless threatened species that are being logged into extinction, like the swift parrot in my home state of Tasmania, and around ensuring that we acknowledge that plantations do have a key role to play in the transition out of native forest logging. Now, plantations are a unique industry; they have very long lead times and they do need unique financing structures that, at times, clash against some of the debt tests in this bill.

I want to be clear: the Australian Greens are considering our position on legislation. There are some small steps forward in this bill, but there are other steps that take us backwards. We want to take a considered approach to this legislation. We do want to be constructive, but we also want to ensure that we are making laws in this place that will see big corporations pay more tax. It's time that the big corporate tax avoiders in this country were held to account. It's time that big corporations were forced to pay their fair share of tax so we can invest in things that allow more and more Australians to lead good and dignified lives, like putting dental and mental health into Medicare, like rising income support, like ensuring that child care is more affordable and like wiping student debt. Those are the things that we should be doing, and we should be making the big corporations pay for it.

Tony Sheldon (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The Albanese government is acting to shed light on Frankenstein companies who are using overseas subsidiaries to rort our tax system. They've got bits and pieces of body all over the world, all arranged to make sure that taxes owed to this country aren't paid to this country. That sort of Frankenstein beast needs to be dealt with, and part of our strategy of dealing with that is this particular bill, the Treasury Law Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023, that's been put forward. It's bringing integrity and transparency to a fair paying tax system.

We're currently consulting on draft legislation to introduce a 15 per cent global minimum tax and domestic minimum tax for multinational and national companies with annual global revenue of at least $1.2 billion. While we're consulting, we're passing this bill to increase transparency and stop multinationals claiming excessive debt reduction to duck their tax obligations. Jason Ward from the Centre for International Corporate Tax Accountability and Research has done a deep dive into some of these dodgy tactics used by companies that operate and earn their profits in Australia but send the Frankenstein taxes overseas so that they can avoid tax altogether. Mr Ward found that Amazon Australia, 'Organises their businesses so the contractual payments from clients are paid directly to Amazon entities in Delaware, with a small amount of that revenue being returned to locally based Australian companies via service agreement.' Ward also found that Amazon was reporting, 'Low profits or losses in Australia by using potentially artificial expenses to avoid corporate income tax payments.'

Amazon's cloud computing business, AWS Australia, claimed they were running at a loss by reporting $1.1 billion in administrative expenses. What makes that number is clear as mud: while they're raking in billions of dollars, they continue to penny-pinch on taxes and thumb their nose in the face of governments around the world. In 2023, Amazon had a revenue of A$878 billion and its founder, Jeff Bezos, had a personal wealth of $309 billion. Bezos is going to space using money stolen from Australian taxpayers while we're in the middle of cost-of-living challenges. He and his Orwellian company are literally reaching into the pockets of the Australian taxpayer, taking their hard earned dollars and squirrelling it away from the eyes of the law.

Another company who uses these opaque tactics is McDonald's, whose franchisee model allows it to send profits offshore in the form of royalty fees for the use of intellectual property. In 2020, McDonald's paid $558.5 million in royalties to a shell company in the United Kingdom. This means the royalties were taxed at the UK's 19 per cent corporate tax rate rather than Australia's 30 per cent tax rate. By sending the fee offshore, the company's Australian income tax bill was reduced to just $120.4 billion. The golden arches, which have a long history of wage theft, union busting and insisting their staff give up their lunchbreak to use the bathroom, are shamelessly refusing to pay taxes. While Australian businesses don't have the benefit of profit-shifting, shell companies and tax havens, they pay their fair share for health, aged care and other essential public services.

This bill will create transparency for revenue collection and level the playing field for all businesses. We welcome the support for this bill from the Tax Justice Network Australia, Publish What You Pay, the Australian Council of Trade Unions and the Financial Accountability and Corporate Transparency Coalition. The government thanks them for contributing to the detailed consultation and inquiry into this bill.

The Australian Chamber of Commerce and Industry acknowledges that the government had listened to and implemented stakeholder feedback during the consultation process. The Liberals and Nationals, on the other hand, said in their dissenting report that they can't support this legislation, and they called it 'anti business'. The Liberals and Nationals would rather the potential tax revenue be in the offshore piggy banks of Bezos and McDonald's and their other big-business profit masters. That means less funding for schools, less funding for hospitals, less funding for housing. They are welcome to go back to those shifty tactics of those corporate giants over the wellbeing of Australian taxpayers. But I'm on the side and we're on the side of acting to close the corporate tax rorts used by multinationals and ensure that they pay their fair share of tax right here in Australia.

Andrew Bragg (NSW, Liberal Party, Shadow Assistant Minister for Home Ownership) Share this | Link to this | Hansard source

It's a great pleasure to be able to make some remarks about the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. It's hard to escape the fact that the Labor government's tax policy has been a shambles since they came to office almost two years ago. This is just another example of the maladministration of the Labor government. I wonder if perhaps it stems from the absolute mess in the ministry where we see a Treasurer who has little to no interest in tax, we have an Assistant Treasurer who doesn't deal with any tax legislation and we have another assistant minister who apparently does deal with most of the tax legislation who last night said that the changes to the stage 3 tax cuts were a tax reform. Hilarious! If I introduce a tax bracket that was abolished by the parliament, apparently that's a reform.

This is the sort of world we're living in—a world where Labor's ambition for the tax system is virtually zero; in fact, it's negative. It's a negative ambition because you're going back and reinserting tax brackets that were abolished by the last parliament. It's remarkable stuff. The tax shambles is across the board, and it is a major problem for the country, because we're heading in the wrong direction on personal income tax and we're heading in the wrong direction on business tax. Of course, the government have also taken it upon themselves to break a slew of election promises in relation to superannuation and franking arrangements. This is a real issue. I think we can all agree there are major inefficiencies and major problems with our tax system. I'm sure that everyone in this chamber and in the House would agree that people find our tax system disincentivising, frustrating and ugly at times, but the options here for reform are virtually nothing, and the government's own policies that they took to the election, which were pretty threadbare in that they ran a small-target strategy, are not really going to lift the ambition at all.

I think the multinational tax piece is a good example. There is no doubt that base erosion and profit shifting has been a major issue, and everyone agrees that companies ought to pay their fair share of taxation. These are easy talking points for anyone, but, a bit like with carbon emissions, it's very hard for Australia to solve these things on its own. That's why working with multinational institutions is very important. It's why, when there's a debate about climate change, there's a conference-of-the-parties meeting, and it's why, when there's a debate about tax issues, particularly in relation to base erosion and profit shifting, there's a need for us to engage with the OECD and other international bodies. Of course, we don't want to have the balloon effect here, which is when we squeeze at one end and that causes a distortion elsewhere. We will just push businesses offshore. We are competing in a dynamic global market for capital and for labour, and that's why we should always try to align legislative definitions with global best practice. That is going to be the best way to defeat base erosion and profit shifting.

This particular bill, which has been at the Senate economics committee for some time, was heavily amended at the end of last year, and we had to do a secondary inquiry after the government introduced dozens of amendments. The government had to amend its own legislation dozens of times because the Senate committee recommended that it was not going to be effective as drafted. I wonder if that has something to do with a lack of ministerial engagement. It does seem strange to me that if you have a minister for taxation, which is effectively what the Assistant Treasurer is, that minister isn't dealing with this bill. It seems very strange that Dr Leigh has been given this bill, which has been subject to these dozens of amendments. Indeed, a second Senate economics committee inquiry identified more technical issues in relation to this bill. No-one disagrees with the thrust of the legislation, which is designed to rein in base erosion and profit shifting. In fact, going back almost a decade, governments of all colours have sought to rein that in. The issue here is whether the amendments are going to be effective or whether they will have perverse impacts on the economy.

Certainly the property industry would say—and they did say it to the Senate committee—that there are major issues in relation to the drafting. In fact, they said that there would be a problem with supply, in that, as the Property Council said:

… if passed in its current form, the bill will hurt project feasibility such that the investment returns of many large-scale projects—think housing projects …

The Property Council said that the 1.2 million housing target policy of the government was going to be put under threat by this bill. You don't need to be an expert on housing to know that the government's housing target policy of 1.2 million is already dead. It's a dead duck already. It's dead in New South Wales because Chris Minns said that he's not going to comply with Canberra's policy. It's dead in the water because the Labor government in Canberra has done nothing to promote supply. In fact, according to the people who will be asked to build these houses, this bill will make it much harder.

When we were running these various inquiries into this bill, I thought it a worthwhile initiative to ask the Treasury what sort of modelling had been done because, if the property, building and construction industry is saying to the parliament that this bill is going to make it harder to build houses, I would have thought that the government of the day would take that reasonably seriously. So, in the committee process, I said:

Given the importance of housing to this nation and how difficult it is for young Australians, particularly millennials and gen Zs, to get into a house, why wouldn't you and the government have commissioned modelling to look at the impact of this bill?

And the Treasury official said:

I think that goes to the difficulty in actually undertaking detailed sectoral analysis in terms of modelling those sorts of effects.

So a major tax bill that is going to impact the way the building and construction industry go about building houses has not been modelled at all by the government or the Treasury. This is baffling stuff. The reason that the private economy is saying that it's a problem is that it's going to play around with the debt deduction creation rules, and it's going to do that ahead of some of the global action that's going to be required to beat down base erosion and profit shifting. So, for reasons that are unclear to us, Dr Leigh has decided to progress the debt deduction creation rules that are going to cause great uncertainty to major housing projects. That is the major issue here when you look at the detail of the bill. The government want to press ahead with a policy they announced at the last election, which no-one will disagree with—to make multinationals pay their fair share of taxation—but by including these debt deduction creation rules, which have been the subject of two separate Senate economics inquiries, they are going to put development at risk.

Unfortunately, Australia has relied upon foreign capital since the First Fleet, and we still rely upon foreign capital. I don't want to see us become a country where foreign fund managers and major super funds own all the houses, but there could be a role here for foreign capital in helping build up our housing stock. We need to build more than a million houses in the next five years if we're going to be able to house our children, so I would have thought that we would want every option on the table.

We don't want to chase away good foreign investment which is going to invest in houses that Australians can live in. That is the great risk here with this bill—that the government has introduced a bill and is now seeking to pass a bill that will make it even harder for Australians to access a home. So, in addition to having no policies that will be followed through on housing supply and with a 'who cares' approach to housing demand, the government is putting at risk projects that would have gone ahead. We're seeing a great amount of neglect when it comes to housing policy in Australia, which is why I imagine the Minister for Housing is in a witness protection program and can't be seen in any major media outlets.

I'll finish on this point. It is very peculiar that the minister for taxation doesn't seem to want to have anything to do with his own legislation and is farming it out to poor old Dr Leigh, who has been sent to manage this mess of a bill, which is in such bad shape that it could undermine the government's own housing policy. I move:

Omit all words after "That", substitute:

(a) the Government amendments on sheet RU100 to the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023 be referred to the Economics Legislation Committee for inquiry and report by 5 February 2024; and

(b) further consideration of the bill be made an order of the day for the first sitting day after the committee has reported.

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

Why? That's one question that I want to ask repeatedly in this speech. I see the government's changes as a welcome step, but it's a tiny, tiny step and we need many, many more. It could be one of my footprints, Senator Ayres! We see the government's previous tax changes. They weren't cuts; they were changes. As a result of those changes, we will see the government increase revenue by about $38 billion over the next four years—so much for tax cuts. They're tax changes that will lead to an increase in tax for mums and dads.

Why are politicians scared of tax reform, and why do they place the burden on families and individuals to pay tax and let multinationals off the hook? Why are politicians scared of tax reform, but they continue tinkering with the system to affect mums and dads, who end up by paying, by far, the lion's share of tax in this country? Why did Senator Sharma, in a very good speech, say that he wants to end bracket creep and the Liberals want end to bracket creep, yet, three weeks earlier, they voted against ending bracket creep with my amendment? They want enduring bracket creep. Why do the Labor Party say they want to end bracket creep—I remember Senator Gallagher said at the time, 'We want to end bracket creep'—but vote against it? My amendment to abolish bracket creep once and for all was defeated.

Why is taxation not transparent? I'll tell you why. It's so that governments can continue to steal money from families to pay for their uncosted bribes. The Senate and the House of Representatives have turned into auction blocks using taxpayers' money to buy votes. That's what they've turned into. That's how the governments of this country work, the uniparty of Labor and the Liberals. Why is the uniparty looking for new ways to tax people? Cars and utes—the foundations for tradies—are now going to be taxed. Clothing is going to be taxed under the Labor Party. Food will be taxed with a new biosecurity levy. Inflation was caused by the Labor and Liberal uniparty during the COVID response—the COVID mismanagement. State premiers were largely Labor, and the federal Prime Minister was Liberal-National. Inflation is a tax, especially on the poor and those with low incomes. Inflation is a huge tax burden. Greenwashing requires corporations to buy carbon dioxide credits. How do they pass the costs on? They pass them on in the form of higher prices.

Why do they require diversity, equity and inclusion and ESG reporting, which are ridiculous and unfounded? No-one has provided the evidence for that policy. It's a compliance tax. Where will the cost of that compliance tax go? Onto the things that mums and dads and families pay for. Whole departments have been created in corporations, and that adds to the prices families have to pay. Why more tinkering? Why more complexity and less productivity? Think about the behaviours this drives with regard to allocation of resources and the behaviour of executives and decision-makers. Why is it that every problem in this country comes out of this building, like housing and excessive immigration, which is putting inhuman catastrophic pressures on people now? People are living in tents, cars, caravans, out in the street and under bridges in Brisbane in one of the richest states in the world. This is happening in our regional cities right up and down the east coast of Queensland. It's a long coast. The Murray-Darling Basin is a disaster. It's climate fraud, a lie and a scam. It's a hoax. Stealing farmers' property rights—the Liberal-National government did that from 1997 to 2007.

We're still living with COVID mismanagement. I had a gentleman in my office today who is vaccine injured. It's been stated by doctors We had to turn the lights off because of the glare. He couldn't look straight at the windows. He had to look down. This was a vibrant healthy person now with COVID vaccine damage. He's almost incapacitated. This was a lively human being now pulled up.

We're still living with the COVID mismanagement. There's inflation from the money supply, as I mentioned. There's inflation from crippling the supply chains during the COVID restrictions. Crippling our supply chains led to higher prices.

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

President, I raise a point of order on relevance. We're here to speak about the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. Not once has the senator mentioned anything to do with that bill, and it's been five minutes. I'm just wondering if you could draw to the attention—

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Senator Bilyk. I will remind Senator Roberts of the topic, but, as you and other senators know, it's a broad-ranging debate.

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

For those senators with poor hearing, let me say again: we support this bill. That's what I opened with. We support this bill—I'll repeat it. I said that.

I've just laid down a litany of problems that are coming from this building in betrayal of the people in this country, my fellow Australians. I'm now getting to the point of that betrayal. The most destructive system in government under the uniparty for the last 70 years has been the taxation system. It focuses our brightest and best people, some of our lawyers and accountants, not on serving our country in competition with foreign companies overseas—the Koreans, the Japanese, the Taiwanese, the Chinese, the Europeans and the Americans—but on screwing the government and getting away from complex, ridiculous taxation systems. They're focused not on competing with foreign owned corporations but on competing with our government. Think of the behaviours that are driven at the corporate level, the allocation of resources, the inefficiency of resources and the behaviour of executives.

Taxation is highly complex. How many pages are there in our taxation act? It's highly inefficient directly in terms of allocation of resources and indirectly in terms of the behaviours that are driven. It's directly inefficient in terms of the way taxation is levied in this country. James Killaly is a former deputy commissioner of taxation in charge of large companies and foreign matters. He said in 1996 and 2010, 'Ninety per cent of Australia's large companies are foreign owned and, since 1953, have paid little or no tax.' This bill does go a little way towards addressing that, but we need to address it full on.

Why does that happen? Why are foreign companies getting let off the hook? I'll tell you why. It's because many of even our large Australian companies are part-owned and controlled by foreign corporations. The major predators are Vanguard, BlackRock, State Street and First State. They own 10 per cent of the four banks combined and they own the controlling interest. They tell the banks what to do—BlackRock, State Street, Vanguard, First State and others in that little cohort of multinational predatory organisations. We don't have four main banks. We have one main bank that is hiding behind four logos. That's what we have. They have the same policies, principles, strategies, products and services.

Coles and Woolies, again, are part owned by BlackRock, State Street and Vanguard. If you go right through our corporations in this country, the corporations we thought were Australian owned, they're foreign owned and controlled, and where does the money go? The profit goes overseas. What did the Morrison government do, along with the state premiers? They loaded it up so that foreign multinationals that own the large companies in this country made a killing out of COVID at the expense of small companies and small businesses.

On the other hand, look at Qatar and Norway. They have bountiful natural resources, just like us—not as much as we have, in fact, and yet they make so much more. Qatar made $78 billion out of its gas exports. We export more and we made a tiny fraction of that, around one per cent of that.

So why are we doing this? What I'm saying and have been saying for many years, ever since I got into the Senate, is that we need comprehensive, proper and honest tax reform. Let's have a look at the person who introduced GST into this country. Paul Keating was the Treasurer and, I think, Deputy Prime Minister under Bob Hawke. He came so close to introducing the GST, and, at the last minute, the Prime Minister at the time, Bob Hawke, fell over and lacked the courage to do so. Paul Keating was very upset with that. A few years later, John Hewson introduced the GST as part of Liberal Party policy, and who smashed him over it? Paul Keating, the man who introduced the concept of GST to this country.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Senator Roberts, I will remind you to use people's correct titles when referring to former prime ministers.

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

He was the Treasurer at the time. What I'm saying is that the taxation system was mooted for change, and the person who introduced the GST actually smashed the GST, for purely political reasons.

On another aspect of comprehensive tax reform, Treasurer Peter Costello—who has been admired as a Treasurer—found out that Senator Pauline Hanson, who at the time was a member of the lower house, was keen on the transaction tax. As a way of trying to destroy her, he destroyed the transaction tax, even though he had previously said publicly that it had a lot of merit.

The point I'm getting to is: taxation has become a political football. It's not an honest debate anymore; it's about smashing a system. So what I propose is that, instead of proposing a system, we should look at basic principles. We should first of all agree that the taxation system is one of the most destructive systems in this country, if not the most destructive, which is my opinion of it. Once we get agreement on that, we should then put forward a set of principles that we can agree on.

I've been giving some thought to principles. First of all, a fair, efficient and honest taxation system would enable us to receive far more income, because the multinationals would be paying their fair share of tax. It should be fair and equitable to all people and to all economic entities, including Australian businesses, and with no exemptions for foreign companies, which are now largely exempt. Making foreign companies and speculators pay their fair share of tax would quickly end the budget deficit and overseas debt and fund future infrastructure without borrowing. The second principle: it should be in the national interest.

The third principle—and this is very, very important for a country, and the reason I went through the problems that are coming from this building—is that it should be incorruptible and impossible for politicians to fiddle with. A major source of political power is the ability of politicians to make legislation that punishes or advantages particular groups. This ability gives politicians from the uniparty enormous power over others because they can enact, for example, taxation provisions that assist their supporters or hurt their supporters' competitors. An honest tax system removes this blatant abuse of power.

The fourth principle: it should comply with and support our Constitution's intent and written provisions—not contradict our Constitution but comply with it. The fifth principle: there should be simplicity in understanding, administration and accountability. It should be completely transparent, unlike the current taxation system, which is deliberately opaque. There should be an objective basis for levying tax. Instead of assessing tax on profit and loss that can be fiddled, use objective measures. These do exist and include, for example, market sale price or straight-out unit cost.

The taxation system needs to be constructive, not punitive. It needs to be efficient to administer, with low administration costs, not the unwieldy behemoth that is administering, or mismanaging, tax at the moment. It should increase people's purchasing power. A good taxation system, an efficient taxation system, will increase people's purchasing power so people are economically far better off, because the burden will be shifted more towards multinationals.

The next principle: there should be minimal disruption to the economy, with no ability for politicians to manipulate the tax system across industry sectors or industry groups. The taxation system could be a wonderful way of getting aggregate economic data and detailed data.

The next principle is arguably one of the most important: accountability. When properly designed, a tax system develops accountability in the government and in the people, through being a restraint on the cost of government. Taxes are necessary to pay for the cost of government, but what happens at the moment, because politicians from the uniparty can ratchet taxation up freely, is that they tend to abuse it and neglect their accountability to the people for managing costs. Politicians will have to manage within the country's means. The next principle: it should help people to become independent of government.

In wrapping up I want to say, again, to the senators who didn't hear me in my opening comments: we support this bill. But it is far too little. Why is it too little? We have plenty of money in this country for investment. We have super funds holding enormous sacks of gold, from rivers of gold. I'm asking the government to change your ways. Put families before large, foreign multinationals—Blackrock, State Street, Vanguard, First State. Put national interest before large, foreign multinationals. Reclaim our national sovereignty, and put it before large, foreign multinationals. Put Australia and Australians first.

I asked this question at the start: why? I ask this question now: why not?

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

In the interests of time, I won't speak for very long today on the Treasury Law Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. The concept of fairness defines who we are as Australians and how we view ourselves as global citizens. From our beginnings as a classless society, we all expect a fair go, and we all expect everyone to pay their fair share. Sadly, the playing field is not so level when it comes to multinationals paying their fair share of taxes, and Australians are rightly angry.

I've spoken in this place many times about the urgent need to address the issue of multinational companies paying their fair share of taxes. Around 34 per cent of our largest and most profitable companies paid no tax in 2016-17. In the ninth and most recent ATO annual tax transparency report for 2021-22, it's clear to see that not that much has changed in the past five years. Thirty-one per cent, or 831, of Australia's largest corporations once again paid zero tax for the financial year. The average Australian worker paid more tax in the last financial year than a lot of our richest companies, many of which had earned over a billion dollars in total income. The local plumber, taxi driver, nurse or teacher's aide does not earn anywhere close to $1 billion a year, yet they somehow pay higher taxes than companies that earn more money in one day than these workers make in their entire lifetime.

Multinational tax avoidance is one of the biggest contributors to inequality in Australia, and by avoiding paying their fair share of taxes these companies are reducing the revenue available to pay for essential services for the Australian people. This means that there is less money for the government to spend on essential services such as health care and education as well as critical infrastructure, including major roads, rail and bridges. Companies that do the right thing when it comes to paying their fair share of taxes are also disadvantaged. Domestic businesses and small businesses, in particular, do not have the ability to exploit mismatches in the international tax system. When taxpayers see multinational corporations legally avoiding income tax, it undermines voluntary compliance by all taxpayers. Unlike our predecessors, we believe that all Australians deserve and expect a level playing field when it comes to paying taxes.

Passage of this bill will require companies to disclose information on the number of subsidiaries and their country of tax domicile, ensuring that large corporate groups are more transparent about their corporate structures. This increased transparency will allow authorities to hold companies to account for engaging in opaque tax practices, such as through the use of subsidiaries located in low-tax jurisdictions, thereby informing government on whether tax laws are operating as intended in collecting the right amount of revenue. Companies will only be required to disclose their subsidiaries and their locations as part of their annual financial report, thereby reducing any extra compliance burdens as a result of these tax changes. This is in line with international approaches.

Schedule 2 of this bill strengthens Australia's thin capitalisation rules. Thin capitalisation is a financial strategy that involves a company financing its operations primarily through debt rather than equity. Because interest on debt is tax deductible, multinationals can adjust their debt levels and use related party borrowings to minimise the amount of tax they pay. This allows the company to benefit from the tax advantages of interest deductions on the debt—often using excessive interest payments to artificially reduce their tax liability. Schedule 2 of this bill limits debt deductions of multinational corporations to 30 per cent of profits. This fixed ratio based approach will replace the current safe harbour test and ensures that deductions are directly tied to the company's economic activity.

Interest expense amounts exceeding the 30 per cent fixed ratio debt deductions will be able to be carried forward and claimed in subsequent income years, up to 15 years, thus ensuring that small entities with greater earning volatility are not adversely affected by this bill. A third party debt test is also being introduced. This test has been designed primarily for the property and infrastructure sectors, which tend to be more heavily geared and provide greater flexibility to deduct genuine third-party debt in a manner consistent with common debt financing arrangements, while balancing the overall tax integrity nature of this bill. We introduced this bill—

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

It is 1.30 pm, and we shall now proceed to two-minute statements.