SPEECH – CORPORATION TAX

22 March 2017

I rise to make a contribution pursuant to standing order 75 on this issue, a reinforcement of the statement of the need for multinational companies to pay tax. I suspect that almost all of the senators in this place would support that principle, making allowance for some of the recent debate—unless you thought the tax was an unfair tax, Senator Williams, in which case you would be encouraged to avoid the law and not pay your income tax, because that is the way you protest to have an unfair tax rule changed.

Senator Williams: That’s the Greens’ way.

Senator O’SULLIVAN: That is obviously the policy of the Australian Greens. Before I start on the substantive issue, I want to address a small reference Senator Hanson made in her speech. I do not believe she intended to leave the impression that this coalition government would, by act or omission, do anything to protect multinational companies from meeting their tax liabilities in this country. That is the position I want to adopt on that statement, and Senator Hanson can qualify or reject that at another time if necessary.

At the heart of a liberal society is people operating within the bounds of the law. On matters of taxation, on matters of how we operate our business, on matters of how we make a contribution to how our society operates, our government is generally by law and regulations. And taxation is no different. The laws in this space are relatively clear. There can be some complex aspects. But generally speaking you operate your business, you have inputs and expenditures, you calculate all of that and if you are left with a sum of money, known loosely as a net profit, you will pay a sum of tax in those circumstances.

I do think that, in this space, there is a belief that those who might make a great effort to avoid or minimise their tax liabilities to the lowest possible level, where it will have an impact on the economy, are generally within the larger corporate community, including many multinational companies. I do not think anyone denies any corporation or any individual the right to conduct their business and manage their affairs in the best way possible, not just to minimise their tax liabilities but to minimise all of their liabilities. That is how you operate a business. If you take your eye of that, if you ignore that, you will not be in business for long.

But it is unfair to say that this coalition government has ignored this issue. People like me have consistently spoken out against things such as transfer pricing; I find that an abhorrent practice. And I agree with Senator Hanson that it has quite a degree of prevalence. Particularly in and around agriculture, transfer pricing is occurring. It worries me that multinational corporations that are operating in our space—whether they own land or not—would exploit the chance to drive on our multibillion-dollar road networks to move soft commodities and freight and use our port networks and take advantage of the massive investment this nation has made and continues to make in matters of biosecurity. We have a very stable rule of law. We have civil jurisdictional relief. We are one of the most stable countries in the world in which to do business. We have a very low sovereign risk, and that is what appeals to many of the corporations and companies that come here.

The message is very clear. This government has already demonstrated its mettle in the space. It will not tolerate people who unlawfully avoid their tax liabilities. We introduced the multinational anti-avoidance legislation. You might remember that former Treasurer Hockey led a very advanced debate in relation to these areas when we hosted the main visitors from the Western world here in 2015. And there has been quite a bit pursued in this space since that time.

Senator Hanson made reference to the fact that this is impacting on our debt. Senator Hanson, I would have to say that that was one of the few things that I disagree with in your speech. What impacted on our debt was the absolute indolence and negligence of the Australian Labor Party when they were managing the economy of this country prior to a change of government. It was pink batts and school halls that impacted on the massive debt—hundreds and hundreds of billions of dollars—that we have got. And, of course, we have an environment where the structural deficits continue.

But, notwithstanding that, this law that was introduced has the potential just in this financial year to claw back $2 billion in tax. Remember, this was resisted by the Australian Labor Party. That is the sort of money that they would have left on the table with multinationals had we not introduced the legislation. Currently, the Australian Taxation Office, I am instructed, are quite aggressively pursuing those potential law-breakers. There are something in the order of 100 very, very significant audits underway, 70 of which are of multinational corporations. The diverted profits tax will commence on 1 July this year, and that provides a powerful new tool to the Australian tax office to tackle these contrived arrangements and uncooperative taxpayers.

This challenge is not just here in our country; this is a challenge across all of the developed economies. This is a challenge faced by many of our trading partners. Indeed, it is an international problem, and the solution therefore requires international cooperation and thinking. Areas such as tax havens, which do not cooperate with the likes of our Australian tax office, make it very difficult for matters to be investigated and prosecuted. These are people, in some instances, particularly with transfer pricing, who have developed some very, very exotic methods in order that they might avoid taxation. As a result, our government will have to visit, I think, some fairly exotic solutions to these problems. I know that one colleague has suggested that we start to look at a royalty on soft commodity exports so as to avoid any impacts on transfer pricing.

My message to multinationals and companies that are being clever with respect to their tax management is to tell them that this is a government that supports statements such as those put up by Senator Hanson that there is a need for multinational companies to pay tax in this country. If you do not want to do that, you should go and trade somewhere else. There are those of us in government, in the coalition—most of us, I would say—who are constantly thinking about the methodologies, constantly thinking about adjustments in legislation and practices, that can achieve this goal.

I sent the message to Wilmar on a couple of occasions. It was a case provided by Senator Hanson. Wilmar ignored a number of us, thinking that we would not achieve outcomes. I think that, if Wilmar had had their time over again in these last two years, they would have behaved differently. They would have listened more intently to what we had to say, and I think we would have got a higher level of cooperation. So I say to the multinational corporate world: you just watch the Wilmar case. It is not over yet. It will send a clear signal to you of the commitment of this government to see that everybody supports the laws, particularly in the case of taxation.