Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023

Speech on Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023

I rise to join colleagues today to speak on the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023. Making multinationals pay their fair share sounds like a reasonable proposition to me, hence I am here supporting the bill. What price do we ask multinational companies to pay to operate in a stable democracy? What price to operate in a country with clear legislation and a judicial system that is separate from government? What price to operate and build a business here in our country? What price to be part of our egalitarian community? What price to use our roads? What price to hope to employ Australians educated in our schools—a workforce treated in our health care? Making multinationals pay their fair share is actually asking multinationals to be responsible corporate citizens and to be part of this broad Australian community—part of our economy, part of the global economy, but also part of this system and not predators of the system.

For as long as I have been here—which is nine years—as the member for Bruce so elegantly put, I have heard those opposite ready to take credit for Labor initiatives in the former Gillard and Rudd governments—where multinational Chevron ended up paying $300 million more in tax—as a line in a press release that said they were doing their job, when in fact they voted against that happening. Those opposite are often over there, and the tenor of the argument around taxation is always the same. The tenor is that if we don't create an environment in Australia where multinationals pay minimum tax, if we're not competitive on a bottom-line tax rate with every other country in the world, then multinationals won't come here to do business and, therefore, we'll miss out on employment and investment. But what this bill is saying is we need to balance those scales. They do not choose to come here simply for a taxation rate. We know already that many of them are structured so as to avoid any taxation rate by using tax havens where they have a got a floor of taxation.

We know that in our global economy these multinational businesses have been structured to avoid tax not just in our country but in other countries around the world. One might argue that it is to avoid tax in countries where the vast amount of revenue raised by governments is from PAYG workers, everyday Australians paying their taxes every week. Our great Australian community, our egalitarian society, has a progressive tax system that draws from every worker in this country making their contribution to build our roads, to create the infrastructure we need, to build and fund our schools and our hospitals—all of the things we as a society value for ourselves. What is the price for multinationals to operate in that community, in that society? For me, the price is that they pay their fair share. It is that when they're using the roads, the highways, the freeways, the airports, the terminals and the ports they pay their fair share. The way they do that is not with a user-pays system where they get a ticket at the gate but through the taxation system. This bill is about doing exactly that.

This bill is about righting the scales and ensuring that multinationals who are operating here and multinationals who want to operate here are making their contribution to our local economy and are operating in the global economy in a responsible way, and when I say 'a responsible way', I mean in a way that respects the populace of the countries where they operate. That's what this is about. This is about ensuring that multinational companies operating in Australia respect us and pay their fair share.

This, of course, was an election commitment from the Albanese government. We committed to ensuring that multinationals would pay their fair share of tax. These measures are rooted in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which was established in 2013. For any of my constituents who aren't economists and aren't accountants, particularly high-flying accountants who deal in multinational taxation avoidance, this may sound like gobbledegook. What it really means is that, collectively, countries across the globe have gotten together and said: 'These companies are getting very clever. They're all avoiding paying tax. They're avoiding paying tax in the UK, in Australia and in other places around the world. We need to muscle-up together and come up with a framework where we can ensure that our populations and our societies are respected.' So more than 135 countries and jurisdictions are working collaboratively within the OECD/G20 inclusive framework on exactly these issues. The joint efforts are focused on implementing measures that address tax avoidance, enhance the consistency of international tax regulations and foster a greater degree of transparency in the global tax environment. It all sounds rather sensible to me.

As the member for Bruce pointed out on several occasions, a Conservative government in the UK was able to implement something seven years ago as part of this framework. My question to those opposite is: where have you been? A UK Conservative government saw the sense in this, but an Australian Liberal-National coalition government didn't. It chose to ignore it. It chose to allow the disrespect of our society by these multinational companies to continue. I can only imagine that what might have been driving them was that, if all of the 135 countries working together closed off all of these avenues for tax avoidance, we'd become the place the multinationals want to be. Except they're cleverer than our 10-year Liberal-National coalition government, because they're already avoiding our taxes, and the 135 countries that are getting together are getting together to say, 'We cannot allow them globally to avoid taxation everywhere. They have to pay their fair share.'

The bill will create a fourth element to a company's annual financial report. At the moment, a company's annual report already includes financial statements, notes to the financial statements and a director's report. This will bring in line a further disclosure. The financial statements for most companies will already include some information on their subsidiaries based on a subjective materiality threshold. The introduction of the disclosure mandate in this bill will enhance the information flow by necessitating the inclusion of details about all subsidiaries.

For those listening at home, it's the old saying: 'Follow the money.' Now you'll be able to follow the money, because they'll have to disclose the subsidiaries. It's pretty simple. Who will be impacted? It will only, likely, apply to large corporate groups that operate from complex corporate structures and multiple subsidiaries. Approximately 470 large corporate groups, entities with $250 million revenue or more, are likely to have multiple subsidiaries. At an aggregate level, the potential in-scope population is estimated at around 8,000 entities—2,100 listed entities and 5,750 unlisted public entities, based on financial report lodgement. However, a large number of these will be smaller companies that have no subsidiaries and, therefore, will disclose a nil statement.

This piece of legislation is our government trying to catch up with the other 135 countries, trying to catch up with what lots of other economies across the globe are doing. In terms of paying their fair share, this is our government doing their share of the legislative agenda to ensure that not just this country but other countries are able to collect the revenue they need to run their societies and economies.

The opposition's position is that the government did not provide enough time for affected stakeholders to understand and provide feedback. But we heard from the member for Bruce this morning that that's not the case, that there have been changes made, there has been consultation. The amendments were first announced in April 2022 as part of the government's election commitment platform. They've since been subject to extensive stakeholder consultation on all the schedules of the bill. In late 2022 there was a public consultation on design, through a consultation paper, and there was a consultation on exposure draft legislation for all schedules in March and April of this year.

The final legislative approach reflects this stakeholder feedback to accommodate genuine commercial arrangements, as much as possible, noting that it is a tax integrity measure. The tax integrity measure is not intended to reflect the status quo arrangement of taxpayers. Postponing the changes would present a revenue and tax avoidance risk by allowing taxpayers to artificially restructure their arrangements to avoid the new rules and gain a tax benefit.

I rise today to support the bill because I believe that multinational companies who operate in Australia should be paying their fair share of tax. I believe that operating here makes them a part of our economy and, therefore, they should respect the citizenry that has created and works in that economy. It's an easy thing to say, 'Make multinationals pay their fair share of tax.' We know, from over time, that multinational companies will gear up to try to avoid measures that have been put in place. But if 135 countries continue to work together, if the Australian government can be a force for good, in this space, rather than a recalcitrant, then we may find that our revenue in this country is enhanced and that we will be able to make commitments to our communities, that we will be able to, in good faith, say that we can raise revenue without raising their personal taxes, that we can raise revenue for the infrastructure that communities like mine so desperately need.

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