Speech in Parliament on Tax Transparency

2.40pm | November 24, 2016

I rise to support the motion, and in doing so I want to place it in its proper context, which is that the government is most keen to have a debate about taxation and in particular have a debate about the GST and the role that a rise in the GST might play in plugging holes in revenue and in funding a cut to corporate taxes. That is the reality of the debate we are having now. That is the context in which we seek to initiate a discussion about tax transparency. Instead of talking about a GST, people on this side of the chamber believe that the government should first look to the solution that is right under its nose.

There is a problem in this country with corporate tax avoidance. The Senate inquiry into corporate tax avoidance has just been through this, at length, and found disturbing evidence of the practices that are taking place every day in major multinational corporations in this country. There are real problems with transfer pricing. Apple reported a taxable income of only $247 million in Australia from revenue of over $6 billion. Just last week we heard from Chevron, and they talked to us about why it is that they pay significant amounts, a transfer price, to a shipping company headquartered in Bermuda. They provided the laughable response that the reason they locate their shipping company in Bermuda is to take advantage of the world-leading health and safety standards in that jurisdiction. BHP earned profits of $5.7 billion from its Singapore marketing hub, and the tax paid on that amount in Singapore was $121,000. Uber is a company renowned for being disruptive and innovative, and they are certainly disruptive and innovative in the way they approach taxation. Uber requires its drivers to submit 25 per cent of every transaction to its head company in the Netherlands. That profit, made off the backs of ordinary people driving cars for their company, is not recognised in Australia at all. Uber has 100-odd staff in Australia to facilitate its thriving and growing business—and I should say that it is a very important and interesting business, which I think is going to add great value to our country. Nonetheless, the 100 people headquartered here who are driving this business are not considered to be part of the company and not considered to create value for the company. They are simply described as a 'marketing operation'.

The ATO thinks this is a problem. On Wednesday last week at our hearings, Commissioner Chris Jordan explained it this way. He said:

For example, one thing I find odd is when firms are marketing goods and services here in Australia we're told that it's a 'low value add' activity. But when Australian goods and services are marketed to foreign countries through marketing hubs it is suddenly a highly valuable activity. It just doesn't add up.

This is a real problem. It is a problem that is recognised by the OECD, and we on this side of the chamber do not assert that transparency is the only solution, but we do say that it is a key part of the solution. Some people want to say that it is not necessary that we should be simply focusing on compliance. Indeed, it is very important that we properly resource the ATO. But the truth is that tax transparency allows us to have a proper conversation as a nation about the kind of tax regime we have in place and whether or not it is fair.

The purpose of a transparency regime is not to drive compliance. I agree that that is the job of the ATO. The purpose of transparency is to ensure that we as a nation can assess whether or not the laws currently in place are operating properly to ensure that everybody pays their fair share. Everyone here understands that the ability to fund the services that Australians expect—good health services, good education services, an aged pension and the kinds of things that make Australia a great place to live—is utterly dependant on a robust, fair and effective tax regime. Tax transparency is part of the process of ensuring that we can secure these into the future.