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Monday, 27 March 2017
Page: 2214


Senator ROBERTS (Queensland) (13:29): As a servant to the people of Queensland and Australia, I want to address some fundamental issues in tax collection. This legislation seeks to put in place a diverted profits tax, a punitive measure against companies that seek to avoid their fiscal obligations to the Australian people, to be levied on international companies—multinationals—at a rate of 40 per cent. Whilst a valuable symbolic measure, this tax is really just a gesture and is unlikely to raise much of a sweat in the boardrooms of foreign tax dodgers. Tax avoidance by multinational companies is a massive cost to our nation's finances, worth many hundreds of billions of dollars. It is an issue which Pauline Hanson's One Nation party intends to address. In fact, we have raised it many times.

The International Tax Agreements Act 1953—introduced by Sir Robert Menzies, the then Prime Minister—is one of the offending pieces of legislation by which Australia has been swindled out of its taxation revenue. This and related legislation provides for double taxation agreements with other countries. Double taxation agreements aim to define residency and source rules, which in turn lead to the avoiding and eliminating of double taxation of income or capital in each country. Double taxation agreements contain rules that draw firstly on the domestic laws of this country to attribute a sole country of residence to persons or corporations who would otherwise be regarded as dual residents. While sounding reasonable, this is open to major abuse. This act and associated legislation is in need of major reform. We have to get to the root cause of this, and we go back to there.

Some of the fundamentals: in 1986, then Commissioner of Taxation, Trevor Boucher, introduced self assessment with assistance from the Second Commissioner of Taxation, Mr Carmody. On the face of it, self assessment makes sense. Self assessment is based on assessing millions of tax returns from everyday Australians—individual taxpayers. It makes sense, because if we can think of corporate and individual taxpayers as a triangle, then at the base of the triangle we have the overwhelming majority, which are millions of individual taxpayers. At the top of the triangle, the peak, we have a few multinational companies. Self assessment was aimed at reducing costs and driving more people into the lower group, self assessing and developing a culture of honesty.

With everyday Australians, who feel responsible for the state of our country and the need to contribute our country, that has worked. But for the few multinationals at the very top of the triangle, it gave them a way out. They have been dodging tax for generations. Self assessment has enabled some of these companies—through their power, through the complexity of the taxation regulations and through the complexity of accounting systems—to have their own proprietary accounting systems, which are basically impermeable to the people without experience within that tax system. It makes it very, very complicated and difficult for the Australian Taxation Office. In addition, if the Australian Taxation Office is able to decipher that, the power behind these companies to wear out the Australian Taxation Office in the courts is enormous.

We need simplification. We need external accountability and external assessment to be brought back. But even bringing back external assessment would simply require enormous resources. What we need is a comprehensive review of our taxation system. Mr Shorten, as Leader of the Opposition leading up to the last election, and then Prime Minister Malcolm Turnbull both ruled out tax reform. They will not even discuss, let alone let us look at, the Henry tax review. The 1986 decision was wrong. It may have been largely correct, but the 1986 decision on self assessment was wrong. Before we can get any movement in taxation and get comprehensive reform, we must come up and admit that. Then we have two choices: do we keep patching the current tax system and do we make it externally assessed—then the Australian Taxation Office enters into auditing major multinational companies, with all of the trauma that I have just discussed—or do we step outside our current tax system and comprehensively reform the current tax system? Tax is the price of civilisation; it is a necessary evil. While I cannot attribute this quote to a name at the moment, and I regret that, tax can also be the destroyer of civilisation.

What we find at the moment is that we have major multinational companies that are not individuals, yet are treated as individuals under our law. That is the concept of incorporating. The multinational companies are led by individuals—that is correct—but those individuals are driven by systems that involve key performance indicators or whatever the latest buzzword term is these days. Key performance indicators do not drive loyalty to Australia. Key performance indicators drive serving the corporations' needs.

Those organisations have no interest and no desire to be taxed in this country. They have every incentive, every desire, to continue to avoid tens of billions of dollars of tax that they must pay. Everyday mums and dads pay for the infrastructure that those companies use. Those companies use that infrastructure with very little in the way of funding from them. Sadly, the Treasurer and the tax commissioner have locked themselves into this idea of self-assessment and that we can bring these major multinationals to heel. That is not possible, because the fundamental drivers, the motives, for these companies are at odds with the motives of the Australian taxpayer.

We need a system that is outside the current system, and I propose to you that we need to think strategically about this. Let me give you some examples as to why. In the 1980s, as Treasurer, Paul Keating came very, very close to getting his goods and services tax adopted. The Prime Minister of the day, Bob Hawke, was running his tax summit, and it looked as though the Treasurer at the time, Paul Keating, would get his GST through. But, at the last moment, the then Prime Minister, Mr Bob Hawke, got the wobbles and the wheel fell off the tax cart. Paul Keating was devastated. He really believed in the need for a GST. But just a few years later, when John Hewson raised the issue of a GST, what did Paul Keating do? He smashed John Hewson for raising a GST—such is the nature of debate in politics in this country being so party politicised, so party polarised, so destroying of accountability and truth.

Then I bring you to another example. In the late 1990s, just 10 years later, Pauline Hanson was making a huge inroad into Australian politics and she dared, in her naivety, to float the idea that we should have an open discussion about taxation, because back then she said the multinational countries were raping this country and not paying their fair share of tax and avoiding tens of billions of dollars in taxation—according to the former Deputy Assistant Commissioner of Taxation, Jim Killaly, who retired early last year, hundreds of billions of dollars of taxation. Pauline Hanson had the temerity—or, should I say, the naivety—in her introduction to politics to think that truth would drive a debate. She raised for debate a taxation system in the hope that it would get scrutiny and produce something effective—and, if not, directly lead to something else in that debate.

Prior to Pauline Hanson, the then member for Oxley, raising that, the drivers of that taxation system raised the taxation system with then Treasurer, Peter Costello, Australia's best Treasurer and someone for whom—based upon the reports I have read in the media—I have some regard. He said, according to the originators of that tax system, that it was well deserving of assessment to see if it would work. But the moment Pauline Hanson came out with it, because of her upward trajectory in the polls, Peter Costello crucified her for that taxation system. It was never assessed; it was just ridiculed, based on ignorance and the media. That is who runs this country. Apart from a few individuals behind each party, the powerbrokers, we have the media—and that is costing our country tens of billions of dollars, if not hundreds of billions of dollars.

So we are not going to get an objective discussion simply by floating a taxation system—and that is why we do not. What I would put to you is that we need to first of all have a discussion about the weaknesses and the destructive power of the current tax system. I do not think there would be too many people who would support it once they had the facts, but we do not see the facts very often. We will be bringing you more of the facts. But let us have a discussion about the destructive impact of the current tax system. When I am travelling in regional Queensland, our voters, our supporters, and even those who vote for other parties are telling us that their No. 1 issue is tax. Their No. 2 issue is regulation and the No. 3 issue is energy prices. Then, in regional Queensland, it is the theft of property rights. Taxation is at the top of people's needs. They want it addressed. It is destroying business and it is destroying employment.

Then we have the Labor Party wanting to bring in a carbon dioxide tax. We have just a mish-mash of one tax on top of another tax. That is right: the workers' party, the party of Ben Chifley and John Curtin, wants to bring in a tax that is aimed at increasing the cost of manufacturing and increasing the cost of energy, so that people will use less of it. This is the level of debate in this country on taxation. It is all about squashing each other, rather than protecting the Australian taxpayer. What we need here is to go beyond this window-dressing.

I had a very interesting conversation with the Commissioner of Taxation, Mr Chris Jordan, and one of his senior executives, Jeremy Hirschhorn, last Friday. I asked them what sort of revenue they would expect to raise from these measures. Twenty minutes later, there was no answer; just vague comments and no specific calculation. We understand why. It is because it is so difficult. We have a staffer who used to work in the Australian Taxation Office. I have friends who work in the Australian Taxation Office. It is very difficult to understand the size of this issue. And, until we understand the size of the issue, this bill will not do much.

I have turned around businesses. I have led the turnaround of businesses. I have led the establishment of major innovations of business in this country. I have led football teams. I understand what is important about the energy that needs to be brought to bear on an issue. If the person at the very top does not have an understanding of what is involved, how can he or she be committed? How can he or she really inspire others to follow? If the Australian Taxation Office has no understanding or cannot convey to a senator an understanding of what this bill will bring us in the way of increased revenue, what hope is there? We need a discussion on the detrimental effects of the current taxation system. Then what we need is—after the admission that it is out of control and is not serving the people, the economy and the nation of Australia—to understand and to find some principles for developing an effective, efficient, honest, fair and transparent taxation system. Once we have those defined and have agreement to, concurrence on and commitment to them, then a taxation system will fall out of that. The principles design the system.

So, while we commend the government for raising this multinational tax issue, we say that, at the moment, it is really just window-dressing. We need the captain of the Australian Taxation Office to have the power and the resources to do his job. We need the team members in the Australian Taxation Office to have the ability, through resources, to do their jobs. We need to transform this from window-dressing into something that actively brings multinationals to heel so that the people of Australia can actually have their tax burdens lowered.

We are having a discussion in this country at the moment on penalty rates, on which we will have more to say this Thursday. It is very, very simple. I have worked as a coalminer, I have had a weekly wage, I have had to work overtime and I have had to work on Sundays. One year I worked 10 weeks in a row with only one day off, and that was Christmas Day. I valued penalty rates and I valued public holiday penalty rates. As an employee, I understood that what was really important to me was net pay. As an employer, I know that what interests employers is gross pay.

I had a conversation with the former secretary of the Australian Council of Trade Unions, Dave Oliver. I said to him, 'What is your greatest problem that you think exists in Australia?' He told me, 'Compliance and increasing wages.' I said to him: 'Do you understand the tax system? While you're well intentioned in increasing pay, because you are increasing gross pay much more than you are increasing net pay you are driving jobs out of this country and you are increasing unemployment.' We need to have an honest discussion on the difference between net pay and gross pay—in other words, taxation. We need to have an honest, comprehensive and open discussion on the destructive power of the current tax schemozzle.

We will be supporting this bill. We urge the government to join us in going much further in having an honest discussion and then an honest and constructive debate. The people of Australia need to be set free from the burdens of this tax schemozzle.