Multinational Tax Avoidance Practice

Those of us on this side obviously support the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015. The bill was motivated by information that suggested that multinational companies worth billions of dollars were operating in this country—trading, selling, making a profit—but not paying their fair share of tax. Like most Australians, I was surprised to learn that this could be the case. This issue arose at a difficult time for the government, in the wash-up of its 2014 budget—at the height of the debate about that first budget. That budget was focused on cutting spending, with lots of rhetoric about cutting spending to pay down the debt and deficit and then, lo and behold, it is exposed by journalists that we have multinational companies in this country not paying their fair share. Like all pay all PAYG taxpayers, I was appalled. The debate quickly moved from spending and most Australians started to look to a review of revenue—to the revenue side of the country's balance sheet, if you like.

The time of the national debate following the 2014 budget was an interesting time because it brought our attention sharply to spending and what revenue we should count on. We had a government that was telling us that there was debt and deficit after they had doubled the deficit, and they have now become the highest taxing government since John Howard was Prime Minister. This exposure of the fact that multinationals were not paying their fair share in this country really did sharpen that debate, and the brouhaha caused by the multinational tax avoidance practices has left many Australians very interested in the international tax system—much more interested than they would have been in the past. It falls to this chamber to ensure that transparency in taxation is what the Australian public gets every time we debate taxation. The question of who is paying their fair share is left simmering in the minds of the public. The situation was not helped by the case studies that came out of the Senate inquiry, with the Lux leaks—documents released in 2014 showed that over 300 firms had been involved in routing money through Luxembourg and other low-tax jurisdictions to minimise their Australian tax bills. Firms named in media reports included AMP, Macquarie Group and Lend Lease. The amount of tax avoided through these schemes potentially reaches into billions of dollars.

This raises the question of transparency. This government has just passed legislation to limit transparency around millionaires and the details of the tax they are paying. I want to speak on this bill today because I want to speak for the people of Lalor; I want to represent them here by saying that what they want is transparency. They want to know when companies are not paying appropriate tax. The only thing the man in the street can do about it is hear the name of that company and determine that they do not want to do business with them. It is important that through this process, through the Senate inquiry, we have heard some of those names—and some of those names are household names, as I have just said. There are discussions about iPhones and which piece of them should be paid tax on in this country. The people of Lalor believe that Australia is more than a marketplace for big business—they believe it is a community. Of course every one of us who pays tax knows that we are making a contribution not just to the country but to the community. At the very core, Australians believe that everybody should pay their fair share.

Australians also understand that the tax they pay, whether it be personal tax or company tax, should go to running the country—that our taxes pay for our roads, rail and other transport, for schools, for the justice system that we rely upon, for the public service, for defence and for the universities that train our next generation. Our taxes pay for infrastructure like the NBN, and the simplest test that most Australians would apply to the question of multinationals making a contribution in this country is pretty simple—do these companies utilise these nationally-provided systems?

If we go through them, of course they do. Do they utilise our roads, our rail, our transport systems? Of course they do. Do they get value from our school system? Of course they do. If they are employing Australians, then they are relying on that school system to deliver them quality students who become quality workers. Do they rely on the justice system? Most definitely. If multinationals have an issue, they have redress through our court system. In fact, many people would argue they make better use of it than most of the Australian citizenry. Do they make use of the Public Service? Of course they do. Do they make use of our universities? Of course they do.

All of the things that our taxes go towards paying for, the multinationals have access to and make use of, so it is absolutely reasonable that they be expected to pay their fair share for doing business in this country. I do not think there is one person in Australia who does not believe that should be the case. So, in terms of this piece of legislation and what it might do to ensure that, obviously this side supports it. But, in the spirit of that same bipartisanship, we would ask that those opposite take into consideration the measures that we have put forward in our policy to stop multinational tax avoidance, and introduce legislation that would ensure those loopholes are closed.

In Australia, the average taxpayer, the average wage earner, pays tax to the tune of 21 per cent of their income, and small businesses pay 30 per cent in corporate tax. It is absolutely unreasonable that, by comparison, multinational corporations, through the way they have been able to use both the tax system in Australia and tax systems in other countries, have paid less than that. In fact, the Senate Economics References Committee's recent inquiry into corporate tax avoidance heard evidence that one big multinational firm may have paid as little as two per cent tax on billions of dollars in revenue. If the average Australian wage earner paid tax at that rate instead of at the standard 21 per cent, they would be paying almost $15,000 a year less. So it is perfectly reasonable that we ask those multinationals to pay their fair share in this country. Without strong action to tackle multinational profit-shifting and corporate tax avoidance, Australia will continue to lose millions or even billions of dollars in forgone tax revenue. With government debt continuing to rise under the coalition, we cannot afford to let tax revenue drain away offshore.

That brings us back to this chamber, where we hear day in, day out about spending from a government that has demonstrated for the last two years that it is prepared to break the social compact with the Australian public and to punish the disadvantaged, and suggests that all the issues with our national accounts come down to spending, when clearly here we can see that there are revenue issues. We see a government that is prepared to do some things to change that balance but not enough to come to a bipartisan agreement with Labor in terms of the introduction of our policy.

Labor are taking forward a positive policy on multinational tax avoidance and we are asking for a bipartisan approach to this important issue, and it is in that spirit that the government should adopt our $7.2 billion tax package and tackle all the loopholes that let companies send their profits offshore. This is a reasonable thing to ask—a very reasonable thing to ask. We also note that it is costed, at $7.2 billion, while those opposite are bringing in this legislation and the budget papers indicate what it will save or what it will accrue with a few asterisks. Today in question time the Treasurer said that it is hundreds of millions of dollars. I take little comfort in a Treasurer who talks in terms of hundreds of millions of dollars rather than a specific figure while we are actually debating this legislation in the parliament. So I was aghast in question time today, after the question was asked, that we did not get an answer that provided a clear costing.

Nonetheless, we will support this legislation. We will support this multinational tax avoidance bill through the parliament because we believe tackling tax avoidance and protecting Australia's revenue base should be above politics. We are disappointed that the $7.2 billion multinational tax avoidance plan that we have as policy has not been adopted, but we are hopeful that, rather than have Australians taken for mugs, the government will come on board and implement that as well.

I finish by saying that the question of transparency is at the heart of this for the Australian people. We should not be relying on journalists to determine where we have missed picking up revenue from multinational companies doing business in this country. This government should act to ensure transparency around tax arrangements so that Australians can feel confident that, when they hear about spending, they have a government that is equally committed to ensuring the revenue streams that Australians are entitled to.

It is critical that this legislation be passed quickly and acted upon quickly, and I would also suggest it is critical that those changes be monitored. As we have heard throughout today's debate, tax is complex—earlier, someone likened it to shifting sands or trying to hold sand in your hand—so it is important that the Australian Taxation Office remain nimble and alert, and watch the way the tax system is used by multinationals, so that we can continue to change the laws as required and ensure that revenue stream for Australians.

I make one further comment, which is that, if those opposite argue that for six years the Labor government did nothing to stop this occurring, it belies their own assessment that these things occur because multinational corporations are changing so quickly because the way our markets work is changing so quickly.

It is important that we work together in a bipartisan way so that we remain agile and so that the tax office is given the appropriate resourcing to ensure that it is delivering to the Australian public all tax revenue that is due to this country.