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Monday, 27 March 2017
Page: 2212


Senator KETTER (Queensland) (13:18): I rise today to speak to the Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill 2017 and Diverted Profits Tax Bill 2017. Following on from Senator Whish-Wilson's comments, I want to make a reference to the fact that it was the Senate Economics References Committee which looked very closely at this whole issue of multinational tax avoidance. It provided a report back in August 2015. You cannot tax what you cannot see was part 1 of the reports into corporate tax avoidance. It identified a number of these issues.

Senator Whish-Wilson touched on the fact that, during the course of those hearings, particularly in Sydney—very memorable hearings under the able chairmanship of Senator Dastyari, who is now present in the chamber—we heard extraordinary testimonies from some of the multinational companies in relation to their audacious tax planning arrangements. They were very unrepentant at the time about what they were doing in Australia and in other countries to avoid tax altogether.

I also want to, as I have on previous occasions, reflect the fact that the Greens did play a part and former Senator Milne was very much a part of the setting up of that inquiry, which I think has done some very useful work. But, if this government was serious about getting tough on multinationals, they would do something about the one in three companies that pay no tax. We know that the 2014-15 tax transparency data shows that more than one in three large firms pay no tax, including 109 companies that paid no tax despite reporting more than $1 billion in total income.

Transparency is so important. The report covers 1,904 companies in total, but it is only available because of the former Labor government's tax transparency laws, which were passed in 2013, to the objection of the coalition. I will also, in passing, mention that, unfortunately, the coalition and Greens combined to water down those tax transparency laws, taking two-thirds of private companies out of the reporting net.

It is no surprise that the government is trying to put through this corporate tax integrity scheme in the same week that it is arguing for a $50 billion tax handout to big banks and multinationals. A diverted profits tax is estimated to raise just $200 million over the forward estimates, when Labor's 2016 election multinational tax package would have delivered $1.6 billion over the forward estimates. This alone tells you which of the major parties is serious when it comes to improving the integrity of Australia's corporate tax framework.

The Labor Party will vote for these bills, but they clearly do not go far enough. Labor believes that these bills do not justify the passage of the government's enterprise tax plan. Like other Labor senators, I want to remind the Senate that the issue of multinational tax avoidance has a chequered history during the coalition's time in government. In the additional comments on the economics committee's final report, we drew attention to the government's inconsistency. As I mentioned, the government watered down the tax transparency measures following that. Subsequent efforts by the Abbott-Turnbull governments to address multinational tax avoidance have been patchy and belated, lagging behind the expectations of the Australian community that multinational companies pay their fair share of tax and behind measures announced by the Labor opposition.

Schedule 1 of the bill, which relates to the diverted profits tax, is a welcome start to the coalition's late arrival to action on this topic. Labor will work with the government wherever possible to deter profit shifting and to improve transparency and information sharing with the Australian tax office. The structure of the diverted profits tax is strangely similar to the UK conservative government's diverted profits tax, which goes to show that despite the Treasurer's claims of the government being world leading the Turnbull government is actually behind the times.

Schedule 2, which increases administrative penalties for those companies who do not comply, is also welcome. But, again, a government behind the times is simply following on the shadow Assistant Treasurer's private members bill introduced in February 2016, which would have raised penalties for noncompliant reporting in country-by-country reporting by fiftyfold. The government has essentially implemented Labor policy, albeit rising to a hundredfold.

Schedule 3 updates Australia's rules on transfer pricing to bring it into line with the OECD transfer-pricing guidelines that were approved by the OECD Council in May 2016. These amendments are welcome and we must do everything we can to ensure that intra-party transfers reflect the proper economic value of these transactions. As I mentioned previously, the economics references committee heard on many occasions that cleaning up these rules for transfer pricing, particularly through international consensus, is vital.

It is clear that some multinationals will go to extreme, even absurd, lengths to conceal their tax minimisation practices. The audacity of certain multinationals in refusing to comply with legitimate and reasonable requests for information leaves me with reason to suspect that the current framework for tackling multinational tax avoidance needs significant improvement. The unwillingness of many multinationals to discuss openly their tax arrangements underscores the need to establish mechanisms to increase transparency. Perhaps the most reckless part of the government's inability to combat multinational tax avoidance is their false attempts at true reform. The difference between Labor and Liberal could not be starker: we will put people first. The 2016 budget has shown Mr Turnbull and the Liberal Party will look after high-income earners and multinationals.

The government have seriously mismanaged the budget. The recent mid-year budget update has confirmed the Prime Minister's and the Treasurer's economic plan is in tatters, leaving Australia's gold-plated AAA credit rating at real risk. The figures confirm that debt and deficits are continuing to blow out at the same time as the economy is shrinking and full-time jobs are disappearing. Net debt has blown out to an estimated $317 billion since the Liberals took office, up from $184 billion when they took office. Deficits over the forward estimates have blown out by another $10 billion. Since their first budget, the budget deficit for 2017-18 has blown out tenfold, from $2.8 billion to $28.7 billion. The projected surplus in 2020-21 has shrunk and is now wafer thin, leaving us in the danger zone when it comes to our AAA credit rating.

While this legislation is a welcome change, the Prime Minister and the Treasurer must rule out making harsh cuts to pensioners and vulnerable Australians in the 2017 budget, as flagged by Mr Tony Shepherd and the Menzies Research Centre today. Australians simply do not want a repeat of the horror 2014 budget; they do not want to see harsh cuts to pensioners, families and people with disability. Mr Tony Shepherd is the author of the Commission of Audit report that provided the blueprint for the disastrous 2014 budget. Labor will not forget that the Commission of Audit recommended abolishing family tax benefit part B, increasing the pension age to 70 and cutting pension indexation. The truth is that Australia's pension system is well-targeted and sustainable compared to many other developed countries. Figures from the OECD show that Australia spends a relatively small proportion of our GDP on payments to the elderly. Public spending on old age pensions across the OECD averaged 7.9 per cent of GDP. Australia spends just 3.5 per cent of GDP on old age pensions, making it one of the lowest spenders on pensions in the developed world. Australian pensioners have worked hard all their lives; they deserve a decent standard of living in retirement. They certainly do not deserve to be treated like a burden by Prime Minister and his mates at the big end of town.

Mr Turnbull and the Liberals just do not get the issue of fairness. They will always put the interests of big business ahead of pensioners and ordinary Australians. Nevertheless, Labor will support these bills; however, there is still more work to be done. People can look at Labor's 2016 election platform to see the kinds of sensible reforms on gearing ratios and transparency in reporting that can give Australians the confidence that corporations are making their proper public contribution to our society. (Quorum formed)