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Monday, 19 October 2015
Page: 11627


Mr McCORMACK (RiverinaAssistant Minister to the Deputy Prime Minister) (19:19): The Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 implements three 2015-16 budget measures: the multinational anti-avoidance law; country-by-country reporting and new transfer pricing documentation standards; and stiffer penalties to combat tax avoidance and profit shifting.

Whilst I have been listening intently to my colleagues and those opposite on this bill, I must say it was an excellent contribution, as always, by the member for Lyne. I have been reading a couple of documents: one, The

Financial Review's Smart Invest or November 2015 publication talks about the search for growth, where to find it and how to get on board; and the State of Regional Australia 2015—an inaugural report in which Mike Mrdak, the Secretary to the Department of Infrastructure and Regional Development, in his foreword says:

An evidence based understanding of a region’s performance should underpin community development initiatives, policy settings and investment strategies which can enable a region to prosper and harness the opportunities associated with its own unique advantages.

This got me thinking about my own unique electorate—the Riverina—and the opportunities that could be harnessed, are being harnessed and will be harnessed in the future. Those opportunities are enhanced when everybody—taxpayers, businesses—is paying their fair share of tax. In the Riverina, I would like to think that everyone who is earning an income, be it a taxpayer or indeed a company, is paying their fair share of tax.

This legislation goes to the heart of those multinational corporations which are not paying their fair share of tax. Before I discuss the substance of the bill, I will just talk about a few of the contributions made, particularly, by those opposite. The member for Wakefield, in his speech, talked about the revenue that could be raised from this bill being one less dollar that Australian taxpayers and businesses have to pay. That is not correct. It is not one less dollar that Australian taxpayers and businesses will have to pay; it is one more dollar that we will collect, that should be being collected and that should have always been collected. It is not one less dollar that is going to have to be paid; it is one more dollar that will be paid.

The Minister for Immigration and Border Protection last Wednesday, 14 October, asked how many members opposite had been involved in a small business and just one put up their hand—the member for Melbourne Ports. I appreciate that the member for Parramatta may well have been involved in a small business in her past before she came to this place, but this goes to the heart of the matter. When the same question was asked of the coalition, just about everybody put their hand up. We understand business. We understand the need for tax collection. We understand the need for equitable distribution of that tax which is collected. But the member for Wakefield just does not get it. He said that Senator Dastyari is doing a good job in this space. I can tell you that the good senator is running around at the moment claiming that he understands the Murray-Darling Basin—that is far from the truth.

This particular bill is important. Australia has been a world leader in ensuring that we get on top of multinationals avoiding paying their tax. The key driver of this was the member for North Sydney, the former Treasurer, who led the way during Australia's presidency of the G20. Last year at a doorstop interview on 9 December, he was asked: 'Do you think it's a risk that Australian companies that are operating overseas in other jurisdictions could face a backlash from other agencies or countries that are not as proactive on base erosion and profit shifting?' He talked about this being a challenge. He said that there were large number of Australian companies that operated overseas and emphasised that that is why we need to work collectively and globally to address this. We did that at the G20. We started the process off. Australia's reputation on the international stage is very good. It follows our excellent presidency of G20. The head of the International Monetary Fund, Christine Lagarde, spoke very highly of the work of the member for North Sydney, Joe Hockey, in heading G20.

The member for North Sydney spoke in an interview with David Speers of Sky News three days after that initial interview on 9 December. On 12 December he said in answer to a question about the Google tax of measures to tackle multinationals which do not pay what they ought to in Australia:

It has got to be coordinated global response and this is why the previous Government failed. They had announcements that they never legislated and they never had any coordinated global action. We are determined to work with other countries. We have used the leadership of the G20 this year to get that coordinated global action. We have got a number of fronts that we are dealing with. Firstly, we are working with the OECD on what is known as the Base Erosion and Profit Shifting Plan. We are half way through that, which means there are common rules around the world, particularly in tax havens that ensure that people do start to pay their fair share of tax.

The good work done by the member for North Sydney was certainly front and centre of the G20 in Istanbul, Turkey, which I attended on 9 and 10 February. In session 6 on international tax—

Mr Bowen: Did you go?

Mr McCORMACK: I did go, actually, Member for McMahon. I did go. I attended that. You were not yet in the chamber when I was speaking earlier about the excellent reputation that the member for North Sydney forged as far as our G20 presidency was concerned and the high elevation that he gave Australia's G20 presidency.

The Turkish G20 presidency priority for 2015 included a section on international tax that stated:

We will be monitoring the implementation of the 2014 deliverables of the Base Erosion and Profit Shifting (BEPS) Project. We will also work to ensure a smooth transition to the 2015 deliverables of the BEPS project to secure progress in this field. To enhance inclusiveness of the international tax system improvements, we will continue to incorporate the developing country perspective to the G20 tax agenda, with an increased emphasis on bilateral and multilateral cooperation between tax authorities.

As I said, Australia's reputation at G20 was highly regarded and certainly Turkey was continuing on the good work started by the member for North Sydney and that is now being adopted by the member for Cook, the now Treasurer. That is because this is important.

We have heard during this debate Labor talking about how much this would make. If we look at the second reading amendment that Labor has put forward, it says:

… "while not declining to give the bill a second reading, the House notes that its revenue impact is unquantified, and calls on the Government to adopt Labor’s fully-costed multinational tax package to raise $7.2 billion over the next decade".

We know about Labor's ability to get it so wrong when it comes to estimating how much money might be raised by a particular project. We know that under the Labor government when it was in power the original resource superprofits tax announced by Kevin Rudd and the member for Lilley was estimated to raise $49.5 billion from 2012-13 to 2016-17. The revised mining tax announced by the former member for Lalor, Julia Gillard, and the member for Lilley was originally estimated to raise $26.5 billion over the same period.

Net revenue from the mining tax in the 2014-15 budget was expected to raise over $300 million in total, but we know how wrong Labor got it. The fact is that Labor then spent the money they did not have in typical ALP fashion. They spent it on a whole range of projects and drove our good economic situation that they inherited in 2007 into something that just went from bad to worse. I admit that we did have a global financial crisis. I admit that that knocked our expected revenues about. But we did not need Labor to then run around and spend money that we never had a hope of raising. That was just typical of Labor, spending money it did not have, spending money we never had a hope of raising and tearing the forward estimates asunder.

This is an important piece of legislation. It is good that Labor is actually getting on board with us, despite the amendment. These measures are part of a package of domestic measures announced in the 2015-16 budget to bolster Australia's existing laws to ensure that multinationals pay their fair share of tax. We know that a fairer tax system is one in which all taxpayers meet their tax obligations, and that is why we are committed to addressing tax avoidance by multinationals. If a company makes a profit in Australia, it needs to pay tax in Australia. We do not want individuals and small businesses unfairly carrying the tax burden, for all the reasons that I spoke about earlier. We need to ensure that regional Australia maximises its opportunities. We need to ensure that we are able to roll out and can continue to roll out the infrastructure plans and policies of this government, because we are a road and rail government. We are a government that is investing in ports. We are a government that is investing in valuable infrastructure, ensuring that we protect, preserve and support regional Australia.

In the 2015 budget, the government announced a package of actions to further strengthen Australia's tax laws and level the playing field for domestic business. We are introducing a multinational anti-avoidance law right here tonight to stop multinationals using complex schemes to avoid paying tax in this country by booking revenue overseas. We are also closing the digital tax loophole to ensure that the goods and services tax applies to digital products and services that are downloaded in Australia, and that is important as well. We are also introducing new OECD country-by-country reporting requirements to strengthen the Australian Taxation Office's capabilities to identify profit shifting. Country-by-country reporting will ensure that multinational companies with global revenue exceeding $1 billion need to annually report to tax authorities the amount of revenue, profit, income tax and economic activity that they are generating for each jurisdiction in which they do business.

We need to make sure that there are suitable penalties for large companies engaging in tax avoidance and profit shifting. We need to make sure that there is deterrence for those companies to make sure that they do not try to risk it. This is important legislation. It is good that Labor is getting on board with this legislation, because it is important that we get that revenue base and that we ensure that our base is not continually eroded by those tax avoiders who should be paying their fair share. I commend the legislation to the House.