Treasury Laws Amendment (Tax Integrity and Other Measures) Bill
House of Representatives, 10 May 2018
Watch Matt's Speech
Mr KEOGH (Burt) (16:53): This Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018, which deals with tax integrity and the euphemistic 'other measures', actually covers the great areas of tax havens and multinational tax. When I talk to members of my community, the taxation issue that they raise with me most after WA's distribution of the GST is the lack of a crackdown on multinationals who don't pay their tax. That is the No. 2 taxation issue that members of my community raise with me on a regular basis. I think that's a very useful point to make. It's a useful point to make because it points to the priorities of ordinary Australians. The reason they raise the need for us to ensure that multinational corporations pay tax and don't offshore tax or minimise tax is that they understand that, in order to ensure their access to the essential services they need from government, we need to be able to properly fund our education system, our health system, defence and everything else that the Commonwealth government does—as well as not giving away masses of money to the big banks—and part of that is making sure that there's some integrity to our tax system so that the money that should be paid in taxation is actually paid.
Tax havens threaten Australia's tax base. When our tax revenue gets lost to tax havens, Australians ultimately have to pay higher taxes or, as many constituents in the electorate of Burt realise, suffer cuts to vital services. For example, the Cayman Islands has been criticised by the OECD and by the tax commissioner for its excessive secrecy. There are more companies in the Cayman Islands than people. A single building in the Caymans, Ugland House, is apparently home to over 18,000 companies. The tax commissioner has said in a speech to The Tax Institute:
Many of these matters involve deliberate tax evasion, often using overseas tax havens or complex corporate structures to avoid detection and recovery.
The shock waves from the Panama Papers and similar scandals involving corporations and high-net-worth individuals aggressively minimising their tax are felt around the world. Other governments have been jolted into action on transparency measures since the public outcry over the Panama Papers. The Turnbull government, however—wait for it—has done virtually nothing.
With rising inequality and rising government debt, the time for acting on tax havens has not only come; it's almost gone. We need to get started on this. We need to make sure there's real action. Tax havens have been estimated to hold $7.5 trillion of the world's financial wealth, costing the global economy $200 billion in lost taxes every year. Labor announced, back in 2017, a comprehensive tax haven transparency package, including tax domicile disclosure for government procurement tenders; whistleblower protections and rewards; reporting of tax haven exposure to shareholders; and public reporting of how much tax is paid in jurisdictions that a firm operates in, along with related materials. Meanwhile, what has the government been doing? It has been backtracking on a beneficial ownership register and has commissioned an unreleased, secret Board of Taxation review into the 2016-17 budget measure on OECD proposals for mandatory disclosure of tax.
Why has it backtracked on these measures? One in five of Australia's biggest companies have paid no tax in at least the last three years, but the priority of the Prime Minister and the Treasurer is still to give over $80 billion in tax cuts to big business. We know that Australia is missing out on billions in tax revenue thanks to the loopholes that continue to exist in our taxation system and which the Turnbull government refuses to properly close, despite Labor saying that we will cooperate with them in this area. The introduction of public reporting of country-by-country reports, as suggested by Labor, could help stem the flow of this missing money. But the Treasurer doesn't want to close those loopholes. Despite soaring corporate profits and the fact that Australia's company tax rate places us in the middle of the G20 pack, the only policy this government seems to have is a big company tax cut.
Labor has a different plan, and I've outlined some of the parts of Labor's plan. The point here is that, unlike the many criticisms that we, on all sides, receive in politics that government and opposition can't work together, this is an area of law where we could be working together better to create better law to make sure we have more integrity in our tax system, instead of doing what the government is doing: continuing to bring forward piecemeal pieces of legislation so that it can say it's working on tax integrity and on closing down multinational tax loopholes—which it does frequently say—while in actual fact leaving loopholes open and not doing the full work, even some of the work it said it would do, to close these loopholes. These are the things that need to happen, but the government refuses to do them, which is really quite disappointing. As I said, this is the second biggest tax issue that people in my community raise with me. They know that if we don't get this fixed it results in cuts to their services.
There are other parts of what I referred to as the euphemistic use of 'other measures' in this bill. We see the improvement of tax integrity not only by looking at tax havens and other areas of multinational taxation but by looking at improving the integrity of the small-business CGT concessions. There are some amendments Labor thinks should be made in this area. One of the things that stuck out for me when I looked at this part of the bill was that, despite the fact that it was only on Tuesday—only two days ago—that the government handed down their 2018-19 budget, this is a measure from the 2017-18 budget. The government are really running the parliament well; we're still getting around to trying to deal with issues from the last budget measures, and they've just handed down the latest budget. Maybe we need to include other categories in the forward estimates: one saying, 'This is what we think we're going to do in the next financial year,' and another saying, 'These are the things we might get around to doing, but we don't really know if we'll include it, and hopefully we'll be able to work it through parliament.' These are the areas we actually want to agree with them on. These are areas we want to help them on.
It brings to mind other areas of legislation that are in this space—things like working with the fin-tech sector, which is the other part of schedule 3. Again, this is a measure that is from the last budget that we are only just now getting around to dealing with in the chamber of the House of Representatives.
Mr Husic: It's from 2016-17.
Mr KEOGH: Thank you. I refer to the member for Chifley's very eloquent point—this is from two budgets ago. I wasn't even in the parliament when they budgeted for this. I've had to come into the parliament—the people of Burt had to elect me—so we could get on with this. I thank the people of Burt for doing that. Imagine how far behind we'd be otherwise.
This is a bit like the NBN under this government. It almost goes backwards. It is amazing we have a fin-tech sector in this country, given the way the government goes around legislating for it. It's a bit like a sandbox it tried to create—despite the fact that we highlighted some of the issues that it would have with it—and realised that it doesn't actually work and now it has got to fix it again.
It's a bit like when we tried to create a better way for start-ups to raise capital online. That is another piece of legislation they put into parliament about which we said: 'This is great and we're happy to move on this. By the way, there are a few things you'd better fix up because we think it's probably not going to work the way you think it's going to work.' Then, 12 months later, they said: 'You're right about that. We'd better fix it up; we'll bring in legislation'. We are nearly 12 months past that point, and they haven't even gotten it through the parliament yet—in fact, they haven't even brought it on for debate in the Senate yet.
This really comes back to the point on the concerns we have about this piece of legislation. This is good legislation in theory, but there are things in schedules 3 and 4 in particular that we say need to be improved or fixed up. We are a party that wants to work with the government on making sure that our tax laws have integrity, that we capture multinational tax loss and that we provide an effective system of taxation and an effective regulatory environment for our fin-tech sector and start-up sector. We want to make sure we get it right. I don't want to find myself back here in six months time debating more legislation to fix this legislation, when it's taken two years to get around debating it in the first place.
Whilst overall we support this legislation and the intent of the legislation, as I said before, what it really highlights is that what we really need is Labor's plan to deal with multinational taxation to make sure we actually fix the issue of companies and high-net-wealth individuals being able to offshore their profits and their high incomes to avoid paying tax in Australia, which is where it's needed, so we can provide the services that ordinary Australians rely on. The Liberal government, when it comes to this area, are all light and mirrors. They make it look like they are doing something, and they say they are doing something, but in reality it's a half-baked approach.
It's a bit like their half-baked approach of looking at the financial sector and the big banks in this country. On one hand, they say, 'We're going to give you a big tax cut.' On the other hand, they say to the public—kicking and screaming, I might point out—'We'll hold a royal commission.' Then they look at some of the things that come out of that royal commission and say: 'Look at that bad behaviour! We'll throw the book at them. We'll make sure they get tough penalties. We'll make sure any criminal behaviour gets investigated and looked into.' Then, lo and behold, they hand down a budget, and when we go through the detail to see what's happening with ASIC, $20 million or $30 million is disappearing from ASIC, the agency that would be investigating and enforcing against the banks and our financial sector. Nearly $2 million was ripped out of the Commonwealth Director of Public Prosecutions, the agency that would be prosecuting them. What we see is a continuation of the protection rackets for the big banks and the financial sector in Australia. Here it is again. It's almost a protection racket. The government will say, 'We are fixing up multinational taxation,' but at the end of the day it's all smoke and mirrors.