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Monday, 1 September 2014
Page: 9318


Dr HENDY (Eden-Monaro) (17:51): I rise to support the International Tax Agreements Amendment Bill 2014 and completely reject the disingenuous proposed second reading amendment from the shadow minister, the member for Fraser. I do not seek to speak at any length on this bill as it is an uncontroversial piece of legislation and, given that it is an uncontroversial bill, I think it is bizarre that the shadow minister has moved such a juvenile and hypocritical second reading amendment when there is supposedly bipartisan support in this parliament for dealing with multinational tax avoidance.

Simply put, this bill will amend the International Tax Agreements Act 1953 to give the force of law to the new tax treaty signed by Australia and Switzerland on 30 July 2013 during the term of the last government. As the Parliamentary Secretary to the Treasurer said in his second reading speech on this bill:

Tax treaties facilitate trade and investment by reducing barriers caused by the double taxation of residents in the two countries.

He noted that Australia has 44 bilateral tax treaties. As he said:

The new treaty will fulfil Australia's ‘most favoured nation’ obligations, contained in the existing tax treaty with Switzerland, to reduce its withholding tax rates on dividends, interest and royalties paid by Australian residents to Swiss residents.

The new treaty will also modernise the bilateral taxpayer information sharing arrangements and permit, for the first time, the exchange of taxpayer information for the purpose of preventing tax evasion. This greater transparency includes access to Swiss bank information that could help Australia better enforce its tax laws.

This bill gives me an opportunity to reflect on the international taxation agenda of the government and the upcoming G20 meeting which Australia is hosting in Brisbane on 12-14 November this year. International tax evasion is a scourge that needs the direct attention of world leaders.

The G20, or group of 20, is essentially the 20 largest economies in the world representing 85 per cent the world's economy meeting to cooperate on economic issues. As Chair of the G20 Finance Ministers Group this year, the Treasurer, the member for North Sydney, has done a particularly good job of keeping international tax harmonisation at the forefront of the agenda. My New South Wales parliamentary colleague Senator Bill Heffernan has also done an exceptional job of raising this issue in Australia and I commend him for the work he has been doing in this area. I also want to acknowledge the work of community groups in Australia who have worked in collaboration with international groups like Transparency International on such matters.

Not very long ago, I had the pleasure of meeting Carol Bartlett and Gail Talbot from Micah Challenge in my Bega electorate office. Micah Challenge is a worldwide Christian movement for increasing foreign aid to countries that need help. This year their work has a focus on tax evasion. They particularly referred me to the work of Transparency International and I undertook to add my voice to this part of their campaign in parliament. Transparency International seeks effective work from the G20 Anti-Corruption Working Group, which was set up in 2010. They point out the obvious fact that many of the biggest losers from international money laundering and other evasion are the poorest nations around the world, such as African nations. They argue that, if these matters could be dealt with effectively, it would reduce the level of international development aid that these poor nations require to help sustain their populations.

As the Treasurer stated in a speech on this topic to the Institute of International Finance in Brisbane on 20 February 2014:

Businesses are adopting new ways of doing business. That is due in part to the increasing integration of financial systems and economies around the world, as well as to the phenomenal growth of the internet and other technologies.

The international tax framework has not kept pace with these changes. Our tax systems were built for a world where business was predominantly confined to national borders. This is not the reality of the twenty-first century.

As a consequence, we have seen the erosion of domestic tax bases resulting from international tax planning that takes advantage of the gaps in our current taxation systems.

And citizens expect a comprehensive response from the G20 on this, given the inefficiencies and unfairness apparent in the current system.

That encapsulates the problem in a few sentences.

In signs of progress, the communique from the meeting of G20 finance ministers and central bank governors in Sydney on 22 and 23 February 2014 said:

We are committed to a global response to Base Erosion and Profit Shifting (BEPS) based on sound tax policy principles. Profits should be taxed where economic activities deriving the profits are performed and where value is created. We continue our full support for the G20/OECD BEPS Action Plan, and look forward to progress as set out in the agreed timetable.

By the Brisbane summit, we will start to deliver effective, practical and sustainable measures to counter BEPS across all industries, including traditional, digital and digitalised firms, in an increasingly globalised economy. We endorse the Common Reporting Standard for automatic exchange of tax information on a reciprocal basis and will work with all relevant parties, including our financial institutions, to detail our implementation plan at our September meeting.

In parallel, we expect to begin to exchange information automatically on tax matters among G20 members by the end of 2015. We call for the early adoption of the standard by those jurisdictions that are able to do so.

We call on all financial centres to match our commitments.

We urge all jurisdictions that have not yet complied with the existing standard for exchange of information on request to do so and sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters without further delay.

We stand ready to give tougher incentives to those 14 jurisdictions that have not qualified for Phase 2 of the evaluations.

We will engage with, and support low-income and developing countries so that they benefit from our work on tax.

This is all very important work because of the billions of dollars that have been siphoned off around the world into the black market.

Australia wants to work in collaboration with other nations in this endeavour. If we were to go it alone on this issue, it would disproportionately impact on investment and jobs in Australia. We therefore want to work with others. We really need a global solution. I wish the Prime Minister and the Treasurer all the best in the negotiations they undertake over the course of this year. The government's international tax agenda has the potential to help not only Australians but many millions of people across the world. In the meantime, we are focusing our attention on helping Australians with our schedule of bilateral tax agreements. This bill represents the latest instalment. In conclusion, I commend the bill to the House and reject the proposed second reading amendment of the member for Fraser.