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Monday, 25 June 2018
Page: 3699


Senator BILYK (Tasmania) (10:48): Getting serious about multinational tax avoidance is a question of basic fairness. Fairness is a core belief for Australians, a quality that we all hold very dear. It's more than just an Australian value; it's an integral part of our culture. But there's something happening in Australia right now that's at odds with our egalitarian values and our sense of a fair go. We're experiencing growing levels of inequality. This year the richest one per cent of Australians own more wealth than the bottom 70 per cent combined. If that isn't obscene enough, only six Australians have more combined wealth than the bottom 20 per cent.

The policies of the Turnbull government are not only failing to address Australia's growing inequality but they are also adding fuel to the fire. I have spoken in this place several times about the problem of multinational tax avoidance and its erosion of our tax base. Multinational tax avoidance is one of the biggest contributors to inequality not just in Australia but also throughout the world.

Multinational companies use sophisticated techniques to artificially reduce their profits in higher-tax jurisdictions and increase them in low- or no -tax jurisdictions. These techniques often involve basing their headquarters in a tax haven and then reducing the revenue of their national subsidiaries through charges from the head company such as loans, licence fees or royalties. The arrangements are often made through a complex web of companies to make them difficult to follow and to exploit loopholes in the law. In July 2015, the International Monetary Fund estimated that this was costing developing countries about US$213 billion per year.

The extent of the tax avoidance problem has been revealed in the infamous Panama papers and the Paradise papers, leaked to the media by an anonymous source in 2015 and 2017 respectively. Both leaks revealed not only instances of tax avoidance but also tax evasion, fraud and money laundering. The Paradise papers included the names of over 700 taxpayers and more than 300 corporate entities in Australia. Despite the scale of the problem of multinational tax avoidance, the Turnbull government has failed to show that they are serious about it.

While Labor in government sought to introduce a number of transparency measures, many of these have been wound back by those opposite resulting in more than $1 billion being handed back to big business. Labor's measures included plugging loopholes in Australia's transfer-pricing rules and anti-avoidance provisions. We also passed legislation which cracked down on companies overvaluing assets in international transactions. Labor in government also signed 28 bilateral information-sharing agreements with tax agencies in other countries, including the Cayman Islands and Monaco, which netted about $730 million in additional tax between 2012 and 2014.

Of course, tackling multinational tax avoidance is not just about the legislative measures you put in place but the resources that are there to enforce those measures. So we funded the tax office to set up a specific audit program looking at the use of offshore marketing hubs, getting hundreds of millions of dollars in additional revenue. By contrast, of course, those on the other side, the Turnbull government, have slashed over 4,000 jobs from the Australian Taxation Office. How can they claim to be serious about tax avoidance when they're making such savage cuts to the very agencies that are charged with enforcing anti-avoidance measures?

It's been revealed just recently, through Senate estimates, that the government will be defunding the Serious Financial Crime Taskforce from July 2019. This revelation comes two months after the Minister for Revenue and Financial Services, Ms O'Dwyer, praised the task force for uncovering Australia's biggest tax fraud, which involved, funnily enough, the Cayman Islands.

The government is yet to deliver anything on multinational tax avoidance. It's quite farcical that last year this government trumpeted their so-called success in clawing back $4 billion in a crackdown on multinational tax avoidance, and yet it was revealed in Senate estimates that not one cent of that was attributable to their multinational anti-avoidance law. In fact, the government had relied on laws introduced by the previous Labor government for their tax crackdown, including laws that they had opposed.

We know the real game for the government. We know what they're playing at here. They don't want to get serious about tackling multinational tax avoidance, because it'll upset their mates in big business. However, at the same time they need to pretend that they're doing something about it, because ordinary Australians won't cop it. They won't cop having to pay more tax to make up for multibillion dollar companies that pay none.

Despite evidence of growing inequality, we have a Treasurer, Mr Morrison, who denies that the situation's getting worse but his denial is at odds with all the evidence. It's what we've come to expect from a government which is basically for the big end of town and whose leader is personally named in the Panama papers.

Corporate tax avoidance not only offends Australia's sense of fairness but has very severe consequences for ordinary citizens and taxpayers. Every dollar of revenue that is lost to tax avoidance schemes is a dollar that has to be either raised from ordinary Australian workers and small businesses or cut from essential services such as health and education. But that's not the only unfair aspect of multinational tax avoidance. It also makes an uneven playing field between multinationals and companies without an offshore presence—companies that don't have an overseas headquarters in a tax haven to which they can siphon their profits. And, for those multinational companies that choose to pay their fair share of tax, there's competitive pressure on them to engage in the same kind of behaviour as those who don't.

The Tax Justice Network advocates countries adopt three measures that they believe will help in the crackdown on multinational tax avoidance. These measures are the automatic exchange of information between tax authorities in different countries; a public register that lists the owners and beneficiaries of companies, trusts and foundations; and the requirement for multinational companies to break down their financial reporting on a country-by-country basis. It's this last measure that is addressed by the private senator's bill we are now debating. But that measure is not new. In 2013, the then Gillard Labor government passed legislation that would require the Australian Taxation Office to publish information about the taxable income and tax paid by companies earning over $100 million from 1 July 2015. This bill seeks to reinstate the $100 million threshold after the government voted to increase it to $200 million. The disclosure threshold shielded around 600 large private companies from scrutiny, and this is the kind of cosying up to big business that we have come to expect from the government.

Let me give you an idea of what we have learnt from the data that has been released under the current disclosure regime. In the 2015-16 financial year, reports were published on 2,043 large public and private entities, and 732 of those paid zero tax. I get that companies have ups and downs and can make losses from time to time, but how much of that is a genuine loss, and how much is just a loss that they've managed to put on paper? These entities had a combined income of over $500 billion. But, guess what? An average Australian worker, such as a teacher or nurse or a retail assistant, would have paid more in tax than 700 of Australia's largest companies. When ordinary Australians hear that one-third of our biggest companies didn't turn a profit, I don't think that passes the pub test. It beggars belief that close to 36 per cent of Australia's largest companies made a loss in 2015-16.

The disclosure of this information has made a very useful contribution to the public debate about tax avoidance in Australia. The government haven't offered any policy rationale for increasing the threshold from $100 million to $200 million—not any. And I find it quite ironic that the bill the government introduced to shield 600 private companies from this transparency included the words 'combating multinational tax avoidance' in the title. Embarrassingly for the government, it appears not everyone in their ranks agrees with this decision, because just last month a Senate inquiry report on corporate tax avoidance recommended reinstating the original $100 million threshold—and guess what?— was supported by government senators on that committee. Given that government senators on the Senate economics committee have endorsed the recommendation, I really look forward to hearing them speak in support of Labor's bill.

Reinstating the $100 million threshold is just one of a number of measures that are needed to tackle multinational tax avoidance. But, unfortunately, the government just pay lip-service to the issue. They pretend to be serious about making companies pay their fair share of tax, but our Prime Minister, who, by the way, as I said, is personally named in the Panama papers, has not only been busy watering down tax avoidance measures but also wants to give $80 billion to the very corporations who are engaged in this behaviour. The Turnbull government do have a chance to show they are serious about multinational tax avoidance, and that is by adopting Labor's plan.

Our comprehensive plan includes tightening deduction loopholes, greater transparency about tax information and beneficial ownership, greater protection for whistleblowers and a range of other measures. All of this is in addition to our commitment, contained in this bill, to restore Labor's $100 million threshold for public reporting of tax data for private companies.

So, if those opposite want to demonstrate a commitment to addressing corporate tax avoidance, supporting this bill would be a very good place to start—although I must admit I'm not holding my breath. We know that supporting their mates in big business is in their DNA. You only need to look at the record of those opposite to see what approach they will take to multinational tax avoidance. It's a consistent record of opposing Labor's anti-tax-avoidance measures when we were in government, a consistent record of watering down those measures while they were in government and a consistent record of pandering to their mates in big business, topping it all off with the pursuit of $80 billion in corporate tax cuts. We on this side of the chamber are proud of our record when it comes to tackling multinational tax avoidance and we're proud of the package of measures we have proposed in order to tackle it further when we are in government in the future. I support the bill.