Jonathon Duniam (Tasmania, Liberal Party, Shadow Minister for Environment, Fisheries and Forestry) Share this | Link to this | Hansard source

I rise to speak on the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and its two associated bills. The coalition supports the continuation of the OECD two-pillar process on multinational tax avoidance, a process the former government initiated and is now being continued by the Labor government. Working with like-minded nations in international forums like the OECD is critical to ensuring that multinational corporations from all jurisdictions pay what is their fair share of tax and contribute to the countries in which they operate.

The coalition took extensive action over our nine years in government to address multinational tax avoidance. As the host of the 2014 G20 summit, Australia played a leading role in the original OECD G20 base erosion and profit shifting, or BEPS, project, which was initiated in 2013 and delivered in 2015. Under the coalition's leadership, Australia adopted the OECD G20 BEPS recommendations, which established a multilateral approach to preventing tax avoidance and increasing tax transparency for tax administrators. At the time, the coalition government implemented several key measures including the introduction of the diverted profits tax, the DPT, which limits a company's ability to shift profits outside of Australia. We also introduced the multinational tax avoidance law, the MAAL, ensuring that companies cannot avoid a taxable presence in Australia. We also strengthened the thin capitalisation rules, improved transfer pricing rules, doubled the penalties for tax avoidance and established the ATO Tax Avoidance Taskforce in 2016. The ATO taskforce was designed to enforce existing laws and support new government measures aimed at preventing tax avoidance. Between 2016 and 2021, the ATO raised $24.2 billion in tax liabilities against large public groups, multinational corporations, and privately owned and wealthy groups. This effort generated collections of $17.3 billion.

It's critical that we continue to pursue fair and consistent tax rules not just within Australia but also with like-minded nations around the world. This is exactly what we're doing through initiatives like the OECD two-pillar solution in collaboration with our international peers. We commend the Labor Party for following our lead in continuing this important work. However, while we support these efforts, it's important to recognise that the current government has not fully delivered on its promises. At the last election, Labor made a clear commitment that its sole focus on taxation would be on addressing multinational tax avoidance. Yet, despite this promise, they've failed to follow through on even that basic commitment.

Labor's handling of country-by-country reporting and changes to thin capitalisation has been nothing short of shambolic. The policy incompetence of the Assistant Treasurer has been so glaring that at least once he needed his senior minister, the Treasurer, to intervene and fix his hair-brained schemes. Labor, led by the Prime Minister and the Treasurer, assured Australians that there would be no tax increases beyond working with other countries to make multinational tax regimes fairer, but, as we've seen, this promise was not worth the paper it was written on. Labor's pledge to focus solely on multinational tax avoidance has well and truly been broken.

Instead of keeping their word, Labor has raised taxes in several key areas that will have an impact on the lives of everyday Australians. Labor has increased taxes on superannuation, capturing one-in-10 Australians over time. According to Treasury modelling, young Australians earing average wages today will be subjected to this tax. This is also a new tax on unrealised capital gains—unprecedented in our tax system. This is an assault on family-owned businesses and self-managed super funds, undermining the financial security of hardworking Australians. In addition, Labor has targeted franking credits, banking half a billion dollars in taxes from Australian companies, retirees, super funds and charities. This is a direct attack on the financial wellbeing of those who have worked hard and planned for their future. Labor has also ended small-business tax concessions, dramatically reducing the instant asset write-off that so many small businesses rely on to invest and grow their operations and is failing to provide certainty due to their continued legislative mismanagement. Higher taxes will not help address the cost-of-living crisis that so many Australians are facing. Higher taxes will not solve the problem of anaemic economic growth. Higher taxes will not reverse the collapse in productivity that we're witnessing under this Labor government.

Our economy is shuddering to a halt. Personal income taxes have risen by 20 per cent thanks to bracket creep. Prices are up by 10 per cent, and for working households, prices have increased by over 18 per cent. Real wages have collapsed by nine per cent and living standards have fallen by eight per cent. Household savings have dropped by 10 percentage points also. Australia is now trailing behind our peer nations and a family with a typical mortgage of $750,000 is approximately $35,000 worse off. This is in no way responsible economic management. Labor's higher spending, higher interest rates and higher taxes, coupled with the additional $315 billion of spending across three budgets, have left Australians far worse off.

Their broken promises on taxes, including on superannuation, franking credits and small businesses have only added to this immense pain. The changes to the multinational tax arrangements in this bill do not make up for Labor's attacks on aspirational Australians. These changes do not compensate for Labor's inaction on inflation. They don't address the impact of rising interest rates on Australian households. Nor do they undo the harm caused by Labor's tax policies.

Australians deserve a government that is focused on the challenges they face today. And while the coalition will not oppose this legislation, we will not apologise for holding this government to account for their broken promises on tax, their failure to take meaningful action on productivity, and their lack of focus on fighting inflation. We need a government that prioritises the economic wellbeing of all Australians and takes real steps to address the cost-of-living crisis, improve productivity and, importantly, restore confidence in our economy.

In conclusion, while we support the continuation of efforts to tackle multinational tax avoidance, we can't ignore the broader economic challenges facing our nation. Labor's broken promises and misguided policies have left Australians worse off, and we must continue to hold them to account. Our focus must remain on creating a fair and prosperous Australia where everyone has the opportunity to succeed.

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

I rise to speak on the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and I can inform the chamber that the Greens will be supporting this legislation. We will be doing so for a range of reasons, but in the main because it aligns Australia with the Two-Pillar Solution which has been agreed to by the OECD and the G20, and that Two-Pillar Solution, of course, seeks to reform international taxation rules to improve the taxation of multinational corporate profits.

But I do want to say that we think this bill should be going far, far further than what is proposed in this legislation, and also Labor should be doing much, much more to make big corporations pay their fair share of tax in this country so that we can invest in programs and supports for people, like, for example, putting dental and mental health into Medicare. I'll have a bit more to say about the things that Labor could be doing to make big corporations pay their fair share of tax in Australia but are not doing because they accept obscenely large political donations from those big corporations, including the big supermarket corporations, the big fossil fuel corporations, the big gaming corporations and the list goes on.

This bill implements internationally agreed rules to ensure that multinational corporations with an annual global revenue of A$1.2 billion or greater are subject to a global minimum tax rate of 15 per cent. Putting a floor on the global tax rate for large multinationals is a good thing, and that is one of the reasons the Greens will be supporting this bill. If a multinational entity has a parent or subsidiary company based in Australia but relies on an international tax haven to pay less than 15 per cent at a group level of tax, Australia will be able to apply a top-up tax. While this represents a small step forward in addressing the profit-shifting behaviour of big multinational corporations, it needs to go much further. In Australia, our corporate tax rate is 30 per cent. Fixing a global minimum corporate tax rate of half of Australia's corporate tax rate is far too little. Fifteen per cent is close to the soft rates charged by tax havens like Ireland, Switzerland and Singapore. It'll do little to end the damaging race to the bottom on corporate tax or to rein in the widespread use of tax havens.

The bill is set to increase tax receipts by $370 million over the next five years. That is a good thing, but let's be clear about this: when you take the massive multinational corporations that operate in Australia as a collective group, including things like big pharma companies and big tech companies, that represents a very small drop in the ocean of the profits that those companies extract from our country and our people every year. So we urge Labor to use its position as a member of the G20 and the OECD to advocate for a global minimum corporate tax rate of 25 per cent, which is far closer to Australia's corporate tax rate and is about the weighted average of OECD countries.

Labor are not going to do that—we know that—because they are a party beholden to the oligarchs and the big corporations, but that is what Labor should be doing. If we set the global minimum corporate tax rate at 25 per cent, that would far more effectively reduce the incentive for corporations to artificially inflate the amount of deductible expenses in high-tax jurisdictions. It's also the rate that organisations such as Oxfam, the Tax Justice Network and the Centre for International Corporate Tax Accountability and Research have tirelessly advocated for, including in their submission to the inquiry on this legislation. I want to thank those organisations for that tireless advocacy and for their important work at both a national and a global level to reform our tax and financial systems, address corporate greed and make corporations pay a fairer amount of tax so we can put in place supports that would reduce economic inequality in Australia and help people who are being crushed at the moment by the cost-of-living crisis.

Another issue with the two-pillar solution is that, of course, it favours wealthy countries, with far fewer benefits for countries in the Global South. This is because the right to apply a top-up tax is given, in priority, to the home country or countries of residence of the multinational corporation by applying an income inclusion rule, while the host country's right to top up tax on profits at source is only a fallback. As a result, the two-pillar solution benefits countries where multinational corporations already attribute high levels of profit under current rules—jurisdictions which act as investment hubs or conduits for profit shifting. Estimates show that most Global South countries will gain little or no additional tax revenue directly from the global minimum corporate tax, and, since its rules are highly complex and highly complicated, joining the scheme would not be cost effective for most of those countries. Again, the Greens are asking Labor to increase its efforts to assist democratic governments in the Global South to obtain their fair share of tax revenue from the profits of multinational corporations doing business in their countries.

Notwithstanding the concerns that I've raised, we will absolutely be supporting this legislation. But the aim here from Labor and from Labor's global advocacy should be to prevent the continuation and exacerbation of the present unfair and ineffective approach and maintain the momentum towards a more comprehensive reform that delivers more equity and fairness than the reform that we are currently debating. A fair way to do this would be based on unitary taxation of multinational corporations, with apportionment based on where the corporations are actually doing business and not on their artificial legal structures. That is a proposal that has been advanced by the Tax Justice Network, and I commend them for the work they've done to develop that proposal and for their advocacy of it. A proposal like that could benefit countries and multinational corporations alike by establishing a simple, effective and fairer system for multinational corporate taxation.

We want to see Labor go further. We want to see them go beyond the bare minimum and use their power on the international scene to advocate for strong international tax reform that would rein in the profit-shifting behaviours that we far too often see from multinational corporations and deliver benefits not only to Australia but to countries in the global south, who are going to disproportionately miss out on the tax revenue that they are due from big multinational corporations.

I also want to take this opportunity to talk about corporate tax in Australia and the things that Labor should be doing, but isn't doing, because of the institutionalised bribery of political donations. Labor needs to crack down on corporate profiteering, and it needs to act to make corporate price gouging illegal. The ABS, the Australian Bureau of Statistics, has collected data since 1960 on the share of the economy that goes to profits versus the share of the economy that goes to wages. In the 64 years of collecting this data, corporate profits as a share of the economy have never been higher than they are today, and wages as a share of the economy have never been lower. Think about that for a minute, colleagues. It means that corporations are making off like bandits to an extent that they never have since this data started being collected well over half a century ago. Workers, the people who go to work every day and earn a wage, have never been receiving less of the share than they have since this data started being collected 64 long years ago.

The corporations are doing very nicely in this country, thank you very much, and the workers are doing terribly. It's because governments of both political stripes over the last 50-plus years have been far more interested in acting on behalf of corporations than they have on acting on behalf of wage-earners and ordinary Australians. Corporate profits are at record highs, the amount of money flowing to corporate profits has never been higher, and people are being crushed by inflation, and the RBA's response has been to engage in a record series of interest rate rises.

The lived experience of Australians—who are currently struggling to make ends meet; currently struggling to put food on the table, currently struggling to afford to pay their power bills; and currently struggling with rent increases and interest rate rises, which are smashing mortgage holders—is borne out in some of the data that we are seeing. The big banks are raking in billions of dollars in profit. They are rewarding their CEOs with multimillion-dollar annual salary and bonus packages. Corporate profits as a share of the economy have never been higher. Wages as a share of the economy have never been lower. One-third of the top 100 largest corporations in this country pay no tax at all. Corporations are price gouging Australians. Their profits are going through the roof, and millions of Australians can't afford to put food on the table, pay their rents or keep up with their skyrocketing mortgage payments. Corporations are price gouging, and it is ordinary people who are being smashed as a result.

What Labor should be doing is backing in the Greens on our big corporations tax package that we are taking to the next election as policy. Taken as a whole, the Greens' corporate tax package will raise $514 billion over the next decade. It includes a big corporations tax that will impose a 40 per cent additional tax on excessive profits, which would raise $296 billion over the decade. It includes a revamped tax on offshore oil and gas to close the loopholes in the PRRT, which, as it currently stands, is one of the greatest tax rorts for big corporations in Australia's history—arguably the biggest tax rort that big corporations have ever enjoyed. The other significant component of our big corporations tax is a 40 per cent tax imposed on the superprofits of fossil fuel mining projects, with an exemption for new and vital sectors, like lithium and nickel, that are essential in terms of the renewable energy investment that we need to see in Australia. That tax will raise $107 billion and will ensure that everyone in Australia benefits from the resources that mining companies are extracting.

We could use that $514 billion—the over half a trillion dollars over the next decade that the Greens will raise from our big corporations tax package—to actually help people who are getting smashed with the cost of living. We could afford to build public housing so everyone could have access to a secure and affordable home. We could put dental and mental health into Medicare. We could make university education genuinely free. Most people in this chamber who have a university degree got to enjoy free university when they were studying, whereas now Labor is allowing HECS fees to grow faster than a lot of people can afford to pay them off. It's well beyond time that Labor started backing in the interests of the Australian people over their corporate political donors—well beyond time. It's time that corporations paid their fair share of tax so millions more Australians can lead a more dignified life. It is outrageous that about a third of the 100 highest-earning corporations pay no tax at all—less tax than a nurse or a carpenter or a teacher. It is an absolute, utter disgrace. Labor must do better.

Jess Walsh (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

We are a government that takes multinational tax reform seriously, and we are getting on with practical reforms and practical progress. Indeed, it would be fair to say that there hasn't been a government in Australia that has done more to reform multinational tax than this one—reform led by the Assistant Minister for Competition, Charities and Treasury, Andrew Leigh. Our reforms are about making sure that multinationals pay their fair share of tax in Australia and around the world. Our reforms are about shining a light on the tax affairs of some of our largest multinational companies, because we know that greater transparency brings greater corporate responsibility and greater compliance too.

These are sensible reforms. They are about lifting standards to meet community expectations, and they do just that. Importantly, they are not being done in isolation. The rest of the world, off the back of the OECD's work, is getting on with the job of implementing the very same reforms, making sure that in Australia, in developing nations and right across the world companies benefiting from the economies that they are operating in are giving back to those economies and those societies too.

These bills, the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and related bills, are just the next step in our government's agenda to deliver on our commitments. They legislate the powers necessary to allocate top-up taxes where companies have not paid at least a 15 per cent rate of corporate tax. That can be in Australia or in another jurisdiction. In effect, this sets a global floor on corporate taxes, directly addressing the race to the bottom of corporate tax, ensuring that when companies may be doing the wrong thing, when they may be shifting profits to avoid paying their fair share of tax, there is a multilateral approach to correcting that.

The Senate Economics Legislation Committee held an inquiry into these bills. The committee heard just how important it is for Australia to be one of the leading jurisdictions on these global reforms and what it will mean for lifting the standards of corporate taxes and reporting right across the world. The Tax Justice Network Australia urged the committee to support the passage of the bills through parliament, and the Corporate Tax Association noted the significant milestone these bills represent in delivering the OECD's multilateral changes to global tax laws. The economics committee agreed to recommend that these bills pass.

These bills complement a series of reforms that this place has already passed, delivering on the government's election commitments to reform multinational taxes and to ensure multinationals are paying their fair share of tax. These reforms include important changes to how thin capitalisation rules factor in debt. They include new anti-avoidance rules to ensure artificial debt isn't being created for the purposes of writing down tax liabilities. They include a requirement for publicly listed companies to include detail on their subsidiaries, including where in the world they are and how they operate. Also before the parliament is country-by-country reporting—a really important tool to lift the transparency and reporting standards of these large companies. This will require large companies to report publicly where they are doing business, where they are making their money and where they are paying or, indeed, not paying their share of taxes.

In conclusion, taking this suite of bills together, these reforms are making really important changes to the amount of tax that multinational corporations are paying in Australia and right across the world. They are part of global reforms to boost the transparency and accountability of multinational tax affairs. In Australia, our package of reforms will boost revenue by around $1 billion over the forward estimates. These bills should be commended, and I welcome the parliament's support for them. I welcome the support of the Greens and the coalition, as we've heard this evening, and I thank everyone for the work they have done in championing these reforms and helping to usher them through the parliament.

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

I rise tonight to make a contribution on the Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 and the associated bills. This is one part of a three-part package of bills which seeks to reform our taxation system and which, if passed, will apply to fiscal years on or after 1 January 2024. These bills enable a 15 per cent global minimum tax and domestic minimum tax for multinational corporations operating here in Australia with an average global revenue of A$1.2 billion.

The Albanese Labor government is deeply committed to ensuring that everyday Australians are taxed fairly. In the last month—a little longer than that, in fact—we've ensured that a really fair tax cut has gone to all Australian workers, to every Australian taxpayer, ensuring that more of what they earn stays in their pockets. The Albanese Labor government is 100 per cent dedicated to fairness and equality in every aspect that a federal government is involved in. That is why we also want to ensure that the big end of town—big business, multinational companies—pays its fair share of tax.

We luckily have a very robust corporate taxation system here in Australia where multinational corporations must pay their fair share of tax. Since coming to office just two years ago, the Albanese Labor government has already delivered four significant and integral multinational tax reform measures. We have introduced a new disclosure law which requires listed and unlisted public companies to disclose information on the number of their subsidiaries in their country of tax residency—really important. This creates more transparency in how companies are structuring their subsidiaries and helps prevent corruption and abuse of the legislation.

The second fundamental reform the Albanese Labor government has made in the area of multinational taxation legislation is in the implementation of a public register of beneficial ownership, which makes information relating to who specifically benefits from profits made by multinational corporations and who holds ownership more transparent. The third fundamental part of our multinational tax reform is about strengthening the way our foreign investment system reduces the risk of multinational investors trying to dodge tax. We have delivered a stronger, more efficient, more productive and more streamlined approach to foreign investment.

The Albanese government has delivered a funding boost for the Australian Taxation Office's Tax Avoidance Taskforce in the October 2022-23 budget by around $200 million a year. Our Labor government has bolstered crackdowns on multinationals dodging tax or avoiding paying their fair share of tax in this country. Furthermore, our government has introduced five further reforms for our multinational tax reforms. They include beginning a country-by-country reporting structure that was introduced to parliament and that, once introduced, has been implementing reporting structures since July this year.

These measures are all really important to ensure that multinationals are paying their fair share of tax here in Australia. The register which will be implemented is part of the government's commitment to integrity. We went to the last election committing to having more openness, transparency and integrity in everything that we do, and this is another area that we have delivered in. We will not waver from our commitment to those principles.

Fundamentally, this bill is about the Albanese Labor government ensuring that our taxation system is fair and transparent and has integrity. The entire purpose of our taxation system is to ensure that our country's government services are provided fairly and equitably, and the objective of this bill, to provide that, is no exception. This bill has provided our election agenda and is actually delivering on more objectives in relation to strengthening the way our foreign investment system reduces the risk of multinational investors avoiding taxation. I'd also like to pay my gratitude and thanks to the Assistant Minister for Competition, Charities and Treasury, the Hon. Dr Andrew Leigh MP, for his contribution to this very important piece of legislation.

Tonight, I would like to urge those sitting on the crossbench to support this crucial piece of legislation to ensure that multinational corporations both globally and domestically are taxed fairly, because every Australian taxpayer needs to be treated fairly. There need to be equitable outcomes for the pay-as-you-go taxpayer and multinationals, because that's the principle that Australians really stand for. If we don't ensure that multinationals and individuals pay their fair share of tax, then no government, whether it's a Labor government or whether it's those from the other side, will be able to deliver these services that we need.

This side of the chamber knows, as a Labor government, that, in terms of affordable housing, providing incentives to get people back into the workforce is always going to come from this side of the chamber. If people want a government that is going to be strong and support people in the care economy, like in aged care and in early childhood education, then they know that they have to support a Labor government. To be able to do all these things, we have to ensure that people pay their fair share of tax. So I am proud of the Albanese Labor government and what we have been able to achieve in a very short period of time to turn around and start cleaning up the mess left by those who were in government for 10 years. They didn't address these multinational issues or make sure there is fairness in our taxation system.

Debate interrupted.