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Monday, 19 October 2015
Page: 11577


Mr CRAIG KELLY (Hughes) (15:32): Thank you, Madam Acting Deputy Speaker; it is good to see you back in the chair. Before question time and 90-second statements, I was commenting on the points in this debate raised by the member for Fraser where he indicated that it was Labor's position to force private companies to make their tax affairs public. It appears the member for Fraser has a complete misunderstanding of the difference between public and private companies.

Public companies make their taxation records, their sales and their profitability public because the average man on the street can buy and trade their shares on the stock market. So how profitable those companies are at any particular time is a very important factor that needs to be disclosed to the market so there is full transparency and people can invest or not invest in those companies.

However, private companies are not trying to raise capital from the public. Therefore the only people who need to know about their personal tax affairs—and a fundamental principle of our system of government and Australian society is that they can keep their affairs private—are the tax office and them. That should be a fundamental requirement of our system. It is quite disturbing that members of the Labor Party think that they want to force private companies to disclose their private taxation records to the public.

There are a few reasons why this is such a bad idea. Firstly, think of a company with a $90 million turnover. The member for Fraser suggested that a $100 million turnover should be the threshold for a private company to disclose their records. Take a company with an $80 million or $90 million turnover: if they get to that $100 million mark, all of a sudden, the records that they keep as private must be disclosed to the public. This becomes a disincentive for those companies to go out, invest, take risks, innovate and create new jobs. What absurdity and what nonsense—how could anyone suggest that that is in the interests of the Australian economy? That is what the member for Fraser suggests.

Secondly, another thing the member for Fraser clearly does not understand is negotiations between companies and sales. If you are a company and you are negotiating with a Coles or a Woolworths, the very last thing you want them to know is your turnover and profitability. We have very many highly concentrated markets here in Australia where there is a complete imbalance of bargaining and marketing power in these negotiations. If you were to enable these very large multinational companies to be able to determine the profitability and sales of medium sized Australian companies, you would be putting those companies at a serious disadvantage.

A similar scenario is: if you are negotiating to rent or purchase a house and the person that you are buying or renting that house from has access to your taxation records to know what you income and expenses were last year, no-one would think that that would be fair. However, that is exactly the policy that the Labor Party wants to impose on medium sized Australian companies.

Back to the specifics of the bill: it is very important that we have a taxation system that is competitively neutral between local companies and companies that deal overseas. Companies that have substantial transactions overseas can organise their affairs where they can artificially load up debt in their Australian subsidiary or overcharge their Australian arm for goods and services purchased or imported from overseas. Likewise, they can undercharge on goods that are being exported. That is why it is very important that we have good surveillance by the Australian Taxation Office of large multinational companies that have this ability—so they are paying their fair share of tax.

I have also been hearing criticism from the Labor Party on this proposal. Profit shifting by companies that deal in different jurisdictions is nothing new, so I ask: what have the Labor Party done about this? What did they do in the six years they were in government? They complain about what we are doing and say it is not going far enough, but they had six years in government to do whatever they wanted on this issue, yet they did nothing. It is the coalition that is taking the lead.

Another thing is that I often hear members of the Labor Party say, 'If only we could get all these evil multinational companies to pay their fair share of tax there would be no need for us to take any tough measures.' We currently have a debt and deficit problem in this nation. After the Labor Party's six-year spending spree, the interest bill this country has to pay is more than $1 billion every month. That is the interest on the spending spree in the six years of the previous Labor government. That money has to come from somewhere. That is $1 billion every month.

There are no costing estimates of what this bill will raise, but we have heard the Taxation Office estimate it will be in the hundreds of millions of dollars. Let's say that it is $100 million that is raised in additional taxes paid by multinational companies, which would be fantastic. To put it in some context: that would pay the interest on Labor's debt for 72 hours. If it raised $100 million, it would pay 72 hours of interest on the reckless spending spree of the six years of the previous Labor government. That puts in some context the task we have of trying to balance the budget and return to some type of surplus.

The other issue when we talk about our tax system and multinational companies is that we need to have an internationally competitive tax system. The fact is that we currently do not. If we as a look at personal tax rates we can see that the top rate of personal marginal tax in this country is now 47c in the dollar, plus the Medicare levy. We are approaching the point where, once you hit that marginal tax rate, 50c in the dollar goes to the government and 50c goes in your pocket. Compare that to New Zealand where it is just 33c, Singapore where it is only 20c or Hong Kong where it is just 15c.

In maintaining this taxation system, especially as there is more globalisation, more Australians travelling overseas, more Australian companies doing business overseas and more opportunities for Australians overseas than ever before, we risk many of our talented Australians taking their ideas and entrepreneurial skills offshore where there is greater reward for their efforts and risk-taking. This is why we must be very careful with our taxation system.

Then there is the issue of our corporate rate of taxation. The 30 per cent rate of corporate tax we have is currently still one of the highest in the world. We need to aim to reduce our taxation rate. When I say 'reduce our taxation rate', I do not mean we should reduce the amount of tax flowing to the government. I believe it is possible to reduce the corporate rate of tax and increase the number of dollars flowing into the Taxation Office. Why do I say that? It is because history has shown that every time we have done that in the past that is exactly what has happened.

Over the last 40 years, every single time we have lowered the corporate rate of tax—from close to 50 per cent down to 40-something per cent, to 36 per cent, to 33 per cent and then to 30 per cent—we have not got less tax; we have got more. We have got more as a percentage of GDP. I believe that we are currently in the same position. I believe that if we reduce the rate of corporate tax in this nation we will see more tax dollars flowing into government revenue. It does not matter what side of the chamber we sit on or what our ideology is, we agree that it would be good if the government could get more taxation to pay for the things that we need. If we can do that by having lower tax rates that is what we should be aiming at.

The specifics of this bill is simply that it is aimed to stop multinationals using many of the complex tax schemes to avoid paying tax in Australia by booking their revenue overseas. We are doubling the penalties applying to large companies engaging in tax avoidance and profit shifting. This applies to only about 30 large multinational companies that have a global turnover of $1 billion. One of the provisions will require them to report their revenue and profits in all countries. The coalition are taking good, sensible steps to look at the issue of multinational tax avoidance after nothing at all was done in the six years of the previous Labor government. With that, I commend this bill to the House.