ADDRESS TO PARLIAMENT - BILLS - Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024, Taxation (Multinational—Global and Domestic Minimum Tax) Imposition Bill 2024 - Second Reading

There are some aspects of the member for Hawke's speech which I earnestly agree with. If you do business in Australia and with the Australian government, yes, you should pay your fair share of tax. There's no question about that. For many multinational entities operating in the global village that the world is today, as long as they have a big team of accountants, lawyers and smart financial people, they have unfortunately been able to avoid paying the tax they should. This is of concern.

We as a coalition welcome the continuation of the Organisation for Economic Co-operation and Development's two-pillar solution to multinational tax avoidance. This was started by the coalition. It's being continued by the government. We very much committed to the two-pillars solution in October 2021. This commitment was based on securing an exemption for resources and financial services companies from the framework so that Australia's tax base would not be eroded. The landmark agreement to secure such negotiations, considerations and outcomes was championed by former coalition finance minister, Senator Mathias Cormann, in his role as OECD Secretary-General. He began that particular position in June 2021.

We took extensive action over nine years of government between 2013 and 2022 to address multinational tax avoidance. As the G20 host in 2014, Australia played a leading role in the original project to ensure that there was a clampdown on multinational enterprises and entities doing what they had done previously for many years, and that is avoiding tax. For every business I know—and I ran a small business—the object of the business is to earn money and employ people.

A division having been called in the House of Representatives—

Sitting suspended from 10:13 to 10:29

Mr McCORMACK: When you run a business, it's your job to continue that business's success. If you don't, you then end up having to qualify to ASIC and other entities why you're running a business at a loss, and you can't do that beyond three successive years. The objective is to minimise tax, but in the right and proper way—the legal way—and, as I said before, to employ people to provide a good or service; almost all Australian companies do just that. But multinational entities, because of the swathe of financial advisers and lawyers and other people they have, have made an art out of not only minimising tax but avoiding tax. When you avoid tax, you are stopping vital funds going to governments at various levels to pay for roads, hospitals and schools, and you are avoiding paying your fair share. I remember that, when I was in business, the more GST I paid the better I knew our company was going because we were getting those receipts in, and when you get receipts in tax receipts go out. You feel a sense of pride because you're employing people and providing a good or service, and you're contributing to the wealth of the nation, the Commonwealth. That is the right thing to do.

As I said, the coalition took extensive action in our three terms to ensure we addressed multinational tax avoidance.

Government members interjecting—

Mr McCORMACK: We did—much to the mirth of those opposite. They weren't all here; I know, because I was the Deputy Prime Minister at the time. I know the role that Senator Cormann, as I mentioned previously, and successive treasurers, including Frydenberg, and Morrison before him, played in making sure we addressed this issue not only at home but also abroad in various fora around the world such as the G20, to crack down on multinationals who wanted to avoid paying tax at all by shifting money from Australia to elsewhere.

Under the coalition, Australia was an early and vigilant adopter of the OECD G20 base erosion and profit shifting recommendations. These provisions establish a multilateral approach to prevent tax avoidance and increase tax transparency to tax administrators—and it's a big job, a massive job, particularly when you've got overseas entities, huge companies, coming in with their various tax avoidance measures. I know the Greens are anti-business with their policies. If they had their way, goodness knows what mess our financial system would be in; they're very anti-big business. You have to be pro-business, whether it's international, large, medium or small. Government's objective is to create the environment in which businesses can not just survive but thrive.

I have been, I have to say, disappointed at some of the reckless policies brought in by the Labor government which have, I believe, been anti-business. It's not just me; I've talked to any number of chambers of commerce and to businesspeople who run large and small companies, and they are concerned as well about the business environment in which Australia operates and which the Labor government is overseeing. I was very interested to see the member for Chifley—the industry minister, no less—talk about lowering the corporate tax rate; he was quickly brought to heel and reprogrammed when the Treasurer didn't necessarily agree with his philosophy on providing a fairer corporate tax rate.

I was proud, when I was the small-business minister, to follow on from the good work by the former member for Higgins, Kelly O'Dwyer, and no less than Bruce Billson, who is now the Australian Small Business and Family Enterprise Ombudsman. While I was the minister in that important portfolio, the tax rate for business came down to its lowest rate for around seven decades. I worked closely with former treasurer Hockey and his successors to ensure that we did provide the framework, the landscape and the environment in which businesses could prosper.

The coalition government's measures included introducing the diverted profits tax, which limits a company's ability to shift profits out of Australia—that's so important—and introducing the multinational tax avoidance law, which ensures companies do not avoid a taxable presence in Australia. We also strengthened the thin capitalisation rules, strengthened transfer pricing rules, doubled the penalties for tax avoidance and established the ATO's Tax Avoidance Taskforce. I commend what the Australian Taxation Office does in this space. That particular taskforce, which was created on 1 July 2016, enforces existing laws and supports the government of the day's new tax avoidance measures that we put in place. Its work continues. It targets multinational enterprises, large public and private groups, and wealthy individuals, as it should.

From 1 July 2016 through to 30 November 2021 the ATO raised—wait for this; this is a big figure—$24.2 billion in tax liabilities against large public groups, multinational corporations, privately owned companies and wealthy groups. This generated collections of $17.3 billion. They're big figures. That pays for a lot of the aforementioned roads, infrastructure, hospitals and schools. It filters down through to the states, making sure that we have the services and amenities that we should provide Australian taxpayers and others besides—Australians who do pay their fair share, Australians who don't have the benefit of large teams of accountants, compliance officers, legal eagles and the like to avoid paying tax. Interestingly, $15.3 billion of the liabilities were raised against large public groups and multinationals, and $13.6 billion of the liabilities and $9½ billion of collections are attributable to the taskforce.

Our system is very much undermined when people or organisations avoid their tax obligations. In one sense, paying tax is something that people should have a sense of pride in. It means that their company is making a profit. It means that what they're doing as a company is succeeding. It means that they're doing the right thing by the country, which puts the framework around them and supports them, and it means that they're doing the right thing by their customers.

This legislation also highlights an important point in that Labor has broken its promises on tax. At the last election Labor said one of its main focuses was to be on addressing multinational tax avoidance, and I'm not quite sure that it has actually met that remit. They haven't done it right. Labor's shambolic handling of country-by-country reporting and changes to thin capitalisation—something I mentioned previously—has been shown up again and again. The Treasurer said, 'We have made it very clear we don't have any proposals for tax increases, beyond working with other countries to make the multinational tax regime fairer,' but I don't think they've met their obligations in that regard.

What Labor has done is raise taxes on superannuation. That's something they said they wouldn't do. But we know that Labor likes tax. They like jacking up tax. They are taxing unrealised capital gains. I tell you what: if you don't believe or agree with what I'm saying, go and talk to a worried farmer. Their farm might be worth a certain amount now, and over time the value of that land increases. What Labor wants to do and has proposed to do is to make that farmer pay an unrealised capital gain on that farm before the farmer has even decided to sell the farm. That not only creates complications for the farmer and how they're doing their business but also generates complicated work for accountants. It slugs the farmer unfairly. She or he has not actually sold the farm, but they're having to pay an unrealised gain. It's bonkers. It's absolute nutty policy. But we know how uncompetitive our farmers are under Labor laws. It's an anti-agriculture government, let's face it.

Labor is increasing taxes on franking credits. It didn't work quite well for the member for Maribyrnong when he was the opposition leader and decided he would attack franking credits during the 2019 election campaign. Some might even go so far as to say it cost him The Lodge. Thank goodness for that. But banking half a billion dollars in taxes from Australian companies, Australian retirees, Australian superannuation funds and Australian charities under the guise of whacking franking credits is not good policy.

Labor's ended small-business tax concessions. It has absolutely taken a big stick to the instant asset write-off provisions. I know we had them as an unlimited amount as a COVID measure, but, I tell you what, they were far better under us than they ever will be under Labor. What Labor doesn't realise is that this is enhancing and promoting, and giving small business the opportunity to buy a ute, particularly if you're a tradie, or for any other company—to write off those profit-making assets, which ends up back in the tax coffers anyway.

This taxation measure is something that the coalition believes is overdue. Labor needs to stop whacking everybody with its high taxes, but the bill is, as I say, something that very much needs to be looked at.