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Monday, 25 June 2018
Page: 3702


Senator HUME (Victoria) (11:00): I rise today to speak on the bill introduced to this place by a parliamentary colleague from the Labor Party who recently departed this place, Senator Gallagher. Senator Gallagher's bill, the Taxation Administration Amendment (Corporate Tax Entity Information) Bill 2017, as has been discussed already, lowers the threshold for publicly reporting corporate tax information of Australian private companies from $200 million to $100 million.

This is not the first time the Australian Labor Party has tried to control confidentiality and commerciality and invade the privacy of private companies whose only crime, potentially, is running a legitimate business. When in government they passed legislation to lower the reporting threshold to corporate tax entities with a reported income of $100 million or more. As noted in 2015 by the then Assistant Treasurer, my good friend and esteemed colleague the Hon. Josh Frydenberg MP:

These laws abrogate the fundamental right to confidentiality.

Moreover, the information to be disclosed, already in the hands of the Australian Taxation Office, will not help the ATO in assessing additional tax. Public disclosure of the information as prescribed in this Labor bill will not inform the public any more than they already are informed and will be unlikely to raise additional revenue that will go anywhere near compensating for the additional administrative burden, the red tape and the invasion of privacy that it will impose.

I say 'invasion of privacy' intentionally, because submissions on the measure, before it was introduced by Labor in this place, highlighted the risk that disclosing the tax affairs of closely-held companies will effectively disclose the tax affairs of those companies' owners—the individuals who own the company, not the company itself. They also highlighted the risk of making public the commercial-in-confidence information of private companies. This bill raises serious privacy concerns but at the same time does absolutely nothing to help the tax office actually assess tax. It's a violation of privacy that is a craven attempt by the Australian Labor Party to further demonise the embattled business community and it ignores the laudable efforts of the coalition government to address tax avoidance, particularly by multinational companies.

The coalition has much to be proud of in its record of addressing corporate tax avoidance. Indeed, multiple game-changing pieces of legislation have already been passed in this place and in this parliament. The government is committed to combating tax avoidance and we are implementing far more well-considered and balanced measures than this. In fact, Australia has been a world leader in combating multinational tax avoidance. As G20 president in 2014, Australia led the global response to corporate tax avoidance by multinational companies and ensured that it remained at the top of the international agenda. Under Australia's leadership the first of the G20/OECD Base Erosion and Profit Shifting recommendations were delivered in 2014. Indeed, Australia was one of the first companies to commit to implementing the OECD's country-by-country reporting. Country-by-country reporting requires large multinationals to report annually for each jurisdiction in which they do business the amount of revenue, profit, income tax and economic activity.

Introduced in December 2015, country-by-country reporting is a very effective information-sharing regime for use by tax and revenue agencies around the world, about which we have heard a significant amount from the Commissioner of Taxation, Chris Jordan, as recently as the last budget estimates. He described country-by-country reporting as being of 'enormous value' and 'transformational' in our international tax work. For the first time, tax administrations have received a global picture of multinationals' operations. This was a very significant step into improving the transparency for tax administrations, and it was Australia that paved its way.

The coalition's 2015 budget also introduced the common reporting standard to combat multinational tax avoidance by exposing taxpayers with hidden offshore investments. The common reporting standards, you may recall, call upon jurisdictions to obtain information from their financial institutions and automatically exchanges that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and the taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. The coalition government legislated for this transformative reform in 2016, and we have been reporting since 1 July 2017.

In my capacity as Deputy Chair of the Senate Economics References Committee, I did, in fact, sit on the inquiry into corporate tax avoidance, which delivered its final report just last month. That inquiry has been going on since 2014 and was recommitted to this parliament immediately after the election in 2016. That report noted the success of the multinational anti-avoidance law, MAAL, and also the diverted profits tax, DPT, both of which have been integral parts of the government's additional $7 billion in sales revenue coming into that tax net, something that the coalition is particularly proud of.

The Turnbull government has been extremely tough on tax avoidance and has been so while still respecting the privacy of private companies. The government has also been successful in applying pressure on multinational corporations that try to avoid paying tax in Australia and, as a consequence, many of the companies in question have changed how they report taxable activities in Australia. Coalition senators noted in our comments in that particular report that the coalition wholeheartedly agrees that transparency is important to ensure that companies pay the right amount of tax. However, we also noted that a balance must be struck between taxpayer confidentiality and the need for any information made public to be well understood and also to be relevant.

While the coalition's track record on combating tax avoidance has been undoubtedly outstanding, we acknowledge that there is more to be done and, indeed, we are not done yet. In the 2018-19 budget, the government announced further measures to ensure businesses are paying their fair share of tax. These measures include such positions as strengthening the rules that limit interest deductibility, to stop companies shifting profits out of Australia, including requiring companies to align clearly and transparently the values of their assets with the values included in their financial statements. A further measure is broadening the scope of large multinationals being subjected to the multinational anti-avoidance law and the diverted profits tax. So these measures further strengthen already legislated and implemented measures to combat corporate tax avoidance. It's imperative though that, whatever measures are established to combat tax avoidance, consideration must be given that any requirement does not unreasonably add the burden and red tape to businesses, noting that many of the businesses—in fact, the vast majority of businesses that we are dealing with—are law-abiding corporations.

This Labor bill is yet another piece of legislation from those opposite designed to inundate business with further compliance and regulatory burden. Never to be outdone, the Australian Greens, for whom the concept of business is obviously foreign, wish to amend the bill to further lower the reporting threshold to $50 million. The attitude of the Australian Labor Party and the Greens towards business is part of the irrational and desperate rhetoric of class welfare. Were we let them to have their way—

Senator Whish-Wilson interjecting

Senator HUME: Class warfare, not welfare! If we were to let them have their way, they would have businesses spending more time and more money on complying with regulation than actually engaging in business activities which require that compliance. The vast majority of our businesses, as you know, are good people who are simply providing the products and services for which there is genuine need and demand. For some reason, Labor and the Greens assume that everybody out there is a criminal until proven otherwise; that they are criminals waiting for the government or the ATO to turn a blind eye. This ingrained hatred and distrust of a capitalist system that is the foundation of Australia's success and prosperity bewilders me.

Red tape is no laughing matter; it's very serious. By one estimate, red tape costs the Australian economy as much as $176 billion every single year. Every new Commonwealth government elected in Australia in the last decade has declared that it would tackle Australia's regulatory and red tape burden. In fact, I might actually point out that Kevin Rudd commissioned a myriad inquiries, reviews, commissions and tribunals into this. He personally acknowledged the scourge that is red tape. He said:

The quantity and complexity of business regulation today is eating away at the entrepreneurial spirit of Australian business.

Goodness me; are you sure he was a Labor Prime Minister!

Former Prime Minister Rudd also created the Commonwealth government's first minister of deregulation. It's not often that I speak in glowing terms of Kevin Rudd's time in the top office but I have to say: wouldn't it be nice to have a Labor leader who actually understood the value of Australian businesses. Instead of embracing the job-creating power of business, which drives our economy, the current opposition leader has sought to demonise businesses large and small, creating a chasm between the Australian Labor Party and entrepreneurial business. If only the Australian Labor Party had a leader-in-waiting in the wings who understood the importance of a healthy relationship between government and the business community. Oh, wait, hang on; I think maybe it does. It does! I note that the member for Grayndler gave a very stirring speech last Friday when delivering the annual Gough Whitlam Oration. Mr Albanese declared:

… we do have to engage constructively with businesses large and small.

We respect and celebrate the importance of individual enterprise and the efforts and importance of the business community.

I'm not exactly sure who the member for Grayndler meant by 'we' in that sentence because, far from respecting the efforts and enterprise of the business community, his leader, Mr Shorten, continues to paint those hardworking business owners as pariahs and has all but declared that, should he become Prime Minister, he will wage a war on business. We know that the ALP has no plan to create jobs, no plan to increase wages and no plan to grow the economy. The ALP is no friend of business. The legislation being debated today is yet another manifestation of the lazy and ignorant attack that is the most base of political tactics.

But I am digressing, I'm afraid. As I was saying, the coalition government has not only promised to cut regulation but has delivered on this very promise. Since the coalition came to government in 2013, the government's regulatory reform agenda has cut burdensome compliance costs for individuals, businesses and community organisations by over $6 billion. In fact, the Annual regulatory reform report, released on 27 May by my great friend and colleague, the Hon. Craig Laundy MP, highlighted the coalition's stellar track record in making it easier for businesses and households to comply with regulations. Between 1 January 2016 and 30 June 2017 the government took decisions to reduce the regulatory burden on businesses by more than $800 million a year. The biggest single regulatory saving, worth over $444 million, came from the abolition of Labor's Road Safety Remuneration Tribunal—what a surprise! As Minister Laundy noted:

This Tribunal was set up by Bill Shorten as Workplace Relations Minister in 2012 as part of a deal between Labor and the unions. It effectively pushed tens of thousands of owner-drivers—many small family businesses—to the brink of collapse, rendering them uncompetitive with big union-dominated trucking companies.

The Turnbull government will always shun unnecessary regulation, and has been working tirelessly to make our regulatory environment easier for businesses and households, encouraging growth and encouraging innovation in the economy.

If the objective is to ensure that those who should pay tax do pay tax, should we not turn our attention to the black economy more urgently? When we're talking about non-reporting and the covering up of information, the black economy is indeed their true home. Instead of creating more red tape and diminishing the privacy of Australian businesses, we in the coalition are, in fact, creating policy and taking steps that go to the heart of the problems of the black economy. Typically, the black economy refers to people who operate entirely outside of the tax system or who are known to tax authorities but who deliberately misreport their tax and superannuation obligations. The black economy can also include those engaged in organised crime and those who are engaged in the production or sale of prohibited goods. We know that the black economy exists, so we should, therefore, be devoting efforts to ensure that adequate and lawful reporting takes place, not arbitrarily targeting those businesses who already do report to the Australian Taxation Office with increasingly burdensome red tape requirements.

Acting Deputy President Sterle, you will not be surprised to hear that we on this side of the chamber are taking real steps to crack down on this type of unlawful black economy behaviour and to ensure that all businesses that should be paying tax in Australia are, in fact, doing so. The Australian Bureau of Statistics has estimated that underground production in Australia could be as much as 1.5 per cent of gross domestic product. That equates to approximately $22 billion. That is not a figure to be sneezed at. Luckily, the Turnbull coalition government is here to clamp down on the black economy.

As recently as last Friday, in fact, the Minister for Revenue and Financial Services, the Hon. Kelly O'Dwyer, announced a new advisory board to support the coalition's ambitious reform agenda to disrupt the black economy. Minister O'Dwyer announced that Michael Andrew AO, who provided such strong leadership to the Black Economy Taskforce last year, will now chair the Black Economy Advisory Board. The coalition are taking real and serious steps to crack down on those who are not, in fact, paying tax or who are engaging in non-market and offline transactions. The advisory board will advise the Treasurer about implementation of the government's decisions attacking the black economy and will contribute to a government report every five years about new threats emerging from the black economy. The black economy is harmful to those honest businesses that do report and pay their taxes. That's why the coalition are delivering real and genuine reform in this space: $315 million in additional funding to the ATO to increase its enforcement activity against black economy behaviour. The black economy standing taskforce, led by the ATO, will also ensure that a whole-of-government approach is used with agencies, sharing intelligence, best practice, and knowledge.

This is on top of the good work that the ATO is already undertaking. Commissioner Chris Jordan, the commissioner of the ATO, outlined to the budget estimates in 2017 just how the ATO will be increasing its attention on businesses not doing the right thing, the black economy, phoenix operators and individuals in the market to ensure that there is a level playing field for all businesses. The commissioner also outlined how the ATO will have a strong focus on the intermediaries—the lawyers, the accountants, the pre-insolvency advisors and the liquidators—who facilitate illegal activity in the black economy and phoenixing operations.

It's this type of important and practical work that is crucial for strengthening our taxation and reporting systems without burdening those businesses who are already doing the right thing by the government and by the nation. This piece of legislation, introduced to this place by the opposition, is no more than a distraction to a coalition agenda that is already addressing the very important issue of corporate tax avoidance, whether it be from multinationals or from domestic entities.