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Tuesday, 19 June 2012
Page: 7051


Mr RIPOLL (OxleyParliamentary Secretary to the Treasurer) (19:16): We are almost in fierce agreement across the chamber—almost. Certainly on a lot of matters there is a fair bit of agreement, such as wanting things like a fair taxation system; international companies and transfer pricing to interact in a proper way with the integrity of our tax system; a tax system that works effectively when people are paying tax; a wider taxation base; and ways to deal with the challenges that this and other countries face in terms of how international multinational organisations—such as Google and those that interact over the web—actually pay a fair share of their tax in Australia. So I would say that on all those matters there is a fair bit of agreement.

It was great listening to the member for Wentworth. He raises some really good issues. It was certainly more interesting than listening to the member for North Sydney. But, unfortunately, the issues that the member for Wentworth raised had very little or nothing to do with the bill that is before us, the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012. If the opposition were genuine about the matters raised in their contribution, they would accept that this bill actually takes us in that right direction. It actually does make clear the intent of this parliament for many a decade and ensures the integrity of our taxation system.

A number of other issues were raised. The member for Wentworth said that there was no instant solution. I would probably agree with him. He is right. There is no instant solution. There ought to be a broader debate in this place about what we do to make sure that we have proper transfer pricing arrangements for organisations such as Google and others and that they pay a fair share of tax. But this is no reason to oppose, as the opposition is doing, the cross-border transfer pricing bill that we have before us. If in fact the only reason, as they say, for not supporting this bill is that it is retrospective, it is a fairly weak and shallow argument. It does not go to the core of what this bill will do when passed by the parliament.

Transfer pricing rules are an integral part of our tax system. This bill will make sure that is the case. When we look at what transfer pricing represents in terms of the Australian taxation system—as we have heard, it is valued at around $270 billion, around half of Australia's total trade flows—we see that it is important that we get this right. The government in November of last year announced that it would reform Australia's transfer pricing rules and that it would move to end the uncertainty that existed around whether or not the transfer pricing rules contained in our tax treaties could actually apply independently of the rules in division 13 of the Income Tax Assessment Act. That is exactly what this bill does. That on its own is worthy of support from the opposition. I find it strange and odd that clarifying a very important part of the integrity of our taxation system cannot possibly find support from the opposition. I find that very odd and very strange indeed.

These changes are extremely important and have been necessary for some time. They go back a long way. As we have heard from other speakers, there is a clear legislative intent by this parliament of how the law should be operating in this particular manner. This bill makes that clear. From time to time that necessity arises. When it does, this parliament—I believe as a whole—should be supporting that.

This bill will ensure that the integrity of our tax system is not compromised by leaving some doubt as to how the system actually operates. What we are doing is absolutely consistent. It is consistent with what are internationally accepted as transfer pricing rules. In the absence of any other further contribution from the opposition, if they want to make a contribution in this area, they should support what we are doing. Again, the government is clarifying the operation of the law.

The government has not come to this view on its own. This is not something that we have done without being mindful of a range of different views. It is certainly something that we have taken as an important step in formulating this amendment bill. In fact, Australia's current unilateral transfer pricing rules were first introduced in 1982 in the form of division 13, so they date back a long way. In fact, the explanatory memorandum circulated by the former Prime Minister and then Treasurer John Howard explained even back then that specific amendments would operate that way. That is consistent with what is being done today to clarify. The government has been absolutely clear in its intent. It is contained in the explanatory memorandum, which sets out multiple examples of parliaments where this is the case. The tax office has been abundantly clear on how this should work and on its intent. Even major accounting firms have supported this as well.

This has been a matter, across different parliaments of different political persuasions, which has always had clear bipartisan support. It is interesting that something has changed now, which means that there is no longer support from the opposition. It begs the question: what has changed? I certainly do not believe that the change is to the integrity of systems of taxation in this county; perhaps the change is to the integrity of the opposition. Perhaps it is that the political imperative now has a higher priority than the national interest. I find that curious and strange in this particular case, as well.

Certainly this amendment is entirely consistent with the commissioner's long-held and publicly expressed view of the current law. We need to be absolutely clear that these amendments constitute a mere confirmation of what the rules are, to the extent that there is any uncertainty. I think this is something that the opposition should support. If their only basis for not supporting this is some view about retrospectivity in terms of how the law applies then I think they should have a closer look at what the intent is—the clarification—and what this means in terms of Australia's taxation system.

This is a good, sound amendment. It is an amendment that, if the parliament were constructed in a different manner, would perhaps have the support of the opposition. Perhaps in this case there is a different political imperative for the opposition. It is not a case of whether it is good policy or bad policy but whether it suits their agenda. I commend the bill to the House. I commend the minister for bringing these amendments forward. The House should support this bill as presented.