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Tuesday, 24 November 2015
Page: 8788


Senator EDWARDS (South Australia) (16:06): I concur with Senator Dastyari's comments about the fact that this committee has been doing work on multijurisdictional tax minimisation avoidance—call it what you like—and transparency. I do reject the contention that we are at the forefront because in his acknowledgement he was quite right to mention former Treasurer Hockey and now Mr Morrison's great work in being at the forefront of the G20. So in fact this committee's work has been valuable in the fact that it has been giving the tax commissioner an opportunity to respond to the concerns of the community has.

The coalition is forcing multinational companies to pay their fair share of tax in the jurisdiction in which they earn their profits. This is not a revelation coming from the benches opposite. That is a simple and important principle encapsulated it in these reforms. This is what we are going to be at debating in the next days. We are implementing on this side the G20-OECD base erosion and profit shifting recommendations on a country by country reporting and harmful tax practices to address multinational tax avoidance and the common reporting standard for automatic exchange of financial account information to address the taxpayer offshore tax evasion. We are stopping the practice of profit shifting, which may have been lawful but was clearly not consistent with the spirit of the law or the public's expectations. Meanwhile, Labor on the other side is seeking to force private companies to publicly reveal their private commercial information with no public benefit—no public benefit!

The ATO has already all of this detail and revealing it publicly achieves nothing in the public interest. It does not provide increased powers to the ATO, it does not increase the amount of tax the ATO raises from those companies, it does not reduce tax minimisation, but it does violate individual privacy and does force companies to reveal their competitors to their suppliers and to reveal to their subcontractors their private financial information, and all for no gain whatsoever to the taxpayer.

Labor and Senator Xenophon plan to block the government's changes and the reforms, which will collect extra taxes which will go a long way to reducing any tax dodging, unless the government accepts the privacy violating amendments, which is certainly not what I think is good policy. They plan to block a government bill that will force multinational corporations to pay their fair share of tax in this country in accordance with the profits they make in this country. Labor and Senator Xenophon have already flagged that they plan to block a government bill that will stop multinational corporations from shifting their earnings overseas into lower tax jurisdictions, rather than paying their tax here. Labor and Senator Xenophon cannot conscionably hold up this legislation for a day longer than it needs to be. I will go some way to explain why they are doing this.

Three weeks ago, these important privacy measures passed the Senate when Labor senators failed to turn up for a vote and when Senator Xenophon did not make it to the chamber for his turn to speak because I understand he was conducting media activity instead and time got away from him. The division was called and the division passed. There was much fury and embarrassment among the aforementioned senators but the bill had passed and that was that— that was that! That was until a red herring came along in the form of a newspaper story about Family Office Institute, an organisation formed to represent the interests of private companies targeted by Labor. The FOI made a submission to the inquiry into the matter by the Senate Economics Committee. The journalist called my office to test a series of accusations about that organisation, about its corporate history, about representations to the inquiry and about its legitimacy. Not one of those accusations withstood basic scrutiny and so not one of those accusations made it into the story—go figure! It is simply attacked the organisation through using the word 'institute' in its name without having members behind it. The story asserted that an institute, because it is an institute, needs to have a substantial membership base, although that is not a definition in which the Oxford Dictionary concurs. There were nine assertions made by the FO I in the inquiry and published in its report. Eight of them were directly supported by submissions by the Law Council of Australia, the Tax Institute of Australia, PWC or by EY. The ninth cited publicly available data. In other words, Labor and Senator Xenophon used the testimony of the Family Office Institute to discredit a report they signed off on and a bill they passed in this chamber three weeks ago, without taking issue with any statement, assertion or word that organisation wrote.

It is a ruse and it is more of the political grandstanding we have come to expect from the other side of the chamber and from parts of the crossbench. Senator Dastyari—I wish he were still here to enjoy this—and I have co-chaired the Economics Committee's corporate tax inquiry and while the purpose of that inquiry has been to uncover certain dealings that might be hidden from public view in order to improve tax law, it turns out that tax minimisation arrangements are not the only deals being done behind closed doors.

Labor has long been running a union protection racket throughout the course of the inquiry. The Labor-crossbench-controlled inquiry actually started when tax exempt trade unions joined forces with the tax exempt 'Tax Justice Network' activist-group to produce a report on corporate tax which, shall we say, was less analysis and more activism.

The ATO pointed out that it was 'patently false' and 'misleading' and that it made fundamental errors, such as analysing company accounting profit rather than taxable income, a fairly fundamental mistake, thereby massively inflating the impression of tax avoidance by entirely disallowing the notion of legitimate tax deductions. It alleged multinational companies had not paid tax where they had in fact already paid tax in other countries and where paying it again in Australia would have been to pay it twice. It singled out 21st Century Fox, for example, the bulk of whose business is done in the US. The report's authors failed to realise that trusts are not taxed until they distribute their income, at which point they certainly are taxed. This is an egregious error. They all are.

Grant Wardell-Jones, a senior tax partner at KPMG, said:

These statistical assertions are clearly misleading and are a misuse of information.

But the facts are not integral when you are running a tax-exempt trade union agenda. Just last week, Chevron bosses were facing questions before the same inquiry about their tax compliance. Those questions arose from a newspaper report which mirrored statements made in a report by the tax-exempt International Transport Workers' Federation, a body funded by the tax-exempt Maritime Union of Australia. The Australian's Leo Shanahan reported that:

In recent years, the MUA has been attempting to gain control of the supply chain to the Gorgon project, being built on Barrow Island off WA's northwest coast, while pushing for higher wages and the removal of foreign workers. It has staged protests and stormed the offices of Chevron in Perth along with militant union partner the CFMEU.

Surprise, surprise! He goes on to report Chevron CEO, Mr Roy Krzywosinski, as saying the reports painted 'a completely inaccurate picture' of Chevron's tax arrangements, and pointing out that the Gorgon project has yet to create one cent in revenue. Chevron might, I add, be responsible for the biggest single commercial investment in Australian history, and their Gorgon project has yet to make a cent.

The Leader of the Opposition, Mr Shorten, the shadow Treasurer, Mr Bowen, and former Treasurer Mr Swan all understand the importance of taxpayer confidentiality—each is on the record defending it. But I guess that Labor's actual leadership team—the ACTU, the AEU, the NTEU and the Victorian Trades Hall Council—has spoken.