Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Gallagher. Australia has a serious tax leakage problem regarding profits and labour sent offshore that are taxed at a much lower rate than profits and labour retained this country. Australian domiciled businesses struggle to compete with foreign multinationals because of this, resulting in significant erosion of the tax base and our capital reserves. Last night's budget has revealed serious structural issues that need to be addressed urgently, with deficits forecast to occur out to 2035-36. Now that the President of the USA has introduced import tariffs, will the Australian government finally do something about our own self-imposed reverse tax tariffs to stop offshore profit-shifting and help improve the budget position?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I thank Senator Rennick for the question and for the issues he's raised there. I can assure Senator Rennick that front of mind at the ERC is looking at how we can ensure the integrity of our tax system. You've seen that with some of the legislation we've brought here, particularly in relation to multinational tax reform, and we will continue to do so. I think, in relation to the more current issues around global trade that are playing out around the world, we've done quite a bit since the Senate last sat about defining an Australian business for the purposes of our own procurement as a government. We spend about $70 billion a year through Commonwealth programs, and one of the issues we've had is how you define an Australian business. In the past, it's just been by an ABN. Australian businesses say to us that is not adequate to say you're an Australian business working here with Australian workers. We've done that, and we've looked at ways to strengthen the procurement guidelines to ensure that, particularly, small businesses get a fair share. I think we'll continue to look at ways to level the playing field, particularly in the way that we purchase services and programs, as a way of making sure that Australian businesses get a fair deal, and we constantly look at ways to ensure the integrity of the tax system, particularly as it relates to the issues you raise around tax leakage and multinationals' tax avoidance.

Sue Lines (President) Share this | Link to this | Hansard source

Senator Rennick, first supplementary?

Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

If Australia were a business, it would be drowning in debt. With forecast losses for the next decade, it would be declared bankrupt and have receivers appointed. Why should the Australian public take Labor seriously on economic management when it can't find solutions to stimulate an economy back into surplus over a decade, given Australia's vast resources, skilled workforce and economic potential?

Sue Lines (President) Share this | Link to this | Hansard source

It's quite a tenuous link to the first question, but I will invite the minister to give you whatever response she sees fit.

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

Thank you, President. I think the link there is the pressure that's on the budget. If I focus on that, I will say to Senator Rennick, 'Look at the work that we've done to repair the budget in the three years that we've been here.' Budgets, obviously, are different in terms of the role that they have to play in the economy. When there is a need for government to lean in, as we saw during economic shocks, the budget is used as a way of leaning in, particularly when private investment withdraws. What we've seen, in welcome ways, is that private-sector investment is returning post the inflation shock that we've just been through, and that is good. That means we can continue to repair the fiscal buffers over time. But a budget also has to provide services and supports to the community. We have to balance up the range of pressures that are on the budget but repair it over time. That's what we've done in the last three years, and that's what we'd do if we were re-elected.

Sue Lines (President) Share this | Link to this | Hansard source

Senator Rennick, a second supplementary?

Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

At the start of this term I had a meeting with Treasurer Chalmers—just as I had a meeting with former Treasurer Frydenberg in a previous term—where I outlined several loopholes in our tax and monetary policy settings that favoured foreign investors. Why has Labor done nothing to remove these loopholes, which would not only help improve the budget position but also be popular with the Australian public?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I know, Senator Rennick, that the Treasurer engages widely across the parliament. He takes ideas and feedback very seriously from other members of parliament, and he takes advice from the Treasury on those suggestions. I would say the work of a Treasurer is never complete. It is never finished. There is always further work that needs to be done.

Sarah Henderson (Victoria, Liberal Party, Shadow Minister for Education) Share this | Link to this | Hansard source

There's a lot of work now.

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Link to this | Hansard source

I know you don't like the facts, Senator Henderson, about what we've done to repair the budget—the budget that was heaving with waste, rorts, debts and interest payments on that debt—since we came to government, but I would say to Senator Rennick that we do take the issue seriously. The Treasurer does engage with members of the crossbench. Where the advice is to proceed, on that advice we have been prepared to act.