Senator DI NATALE (Victoria—Leader of the Australian Greens) (17:08): I rise to speak in support of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015. This bill applies to companies with a global turnover of over a billion dollars. It will ensure that those entities give to the Commissioner of Taxation statements regarding their global operations and activities, including how their income and activities are distributed across countries. There will be a limited ability to object to taxation rulings made by the commissioner. The bill will double the administrative penalty if entities are found to be avoiding Australian tax. The general anti-tax-avoidance rules of the Australian Taxation Office will apply so that the commissioner will consider foreign tax laws when determining whether there are reasonable alternatives to the tax scheme which was entered into. I firstly want to pay credit to the Tax Justice Network report. The Tax Justice Network was instrumental in leading to this outcome, in large part because of their advocacy. I also want to pay tribute to my predecessor, Christine Milne, who, as a result of the Tax Justice Network report and the work of others, referred this issue to a Senate inquiry. I firmly believe that without that report and the work of Senator Milne, Senator Whish-Wilson and others, we would not be debating this bill in the parliament today. The proposed changes are an improvement on where we are now, and that is why we will support them. But those changes alone are not sufficient to address the issue of multinational tax avoidance. They go a small part of the way towards addressing this problem, but much more needs to be done. The government appears to be confused on the issue. On the one hand, it is obvious that the public response to the Senate inquiry and subsequent report forced the government to act. There is absolutely a huge appetite within the Australian community to address the issue of multinational tax avoidance, because it is seen as an issue of basic fairness. Right now we are having a debate in this country about increasing the GST. Many Australians rightly ask why it is that we would introduce a tax that would affect people on low and middle incomes when we have large foreign multinational companies paying very little tax for their activities here in Australia. The government has at least recognised that and has responded to that public pressure. But, at the same time as putting this bill before the parliament, it also pushed through only a few short weeks ago a bill that Michael West described as the 'Rich Mates Act amendment bill', which would encourage tax evasion by hiding from public view the income received and tax paid by some of Australia's largest private companies. Those large private companies were allowed to continue their activities and ensure that they hid from public view the level of income tax that they paid. That is incredibly disappointing, because we know that these companies trade on their reputation or their brand. We only need to look at international experience to see that the best proven way to dissuade tax avoidance is to threaten the reputation or brand of prominent companies, who do not want to have their brand tarnished, who want to continue to operate and have a social licence. We saw this in the UK, when disclosure measures were introduced. We saw companies like Amazon and Starbucks declaring that they would pay tax on UK sales. Up until that point, when their tax avoidance activities were hidden from the public, there was very little tax paid on the huge profits they earned. Now, as a result of the disclosure measures within the UK, we are seeing those big companies beginning to pay tax on UK sales. Here in Australia we have the renowned tax avoider, Glencore, saying that they will close their Singapore marketing hub and begin to pay tax in Australia, as their tax avoidance activities are becoming public. While we support the measures in this bill, it is that critical transparency measure that is necessary if we are to make further progress on the issue of multinational tax avoidance—and we know just how important that is. At the same time that we are in a fiscally constrained environment, as we are constantly being told we are now in, when we have governments telling us we cannot afford to fund, for example, our schools; refusing to commit to funding the out-years of the Gonski reform package; and telling us that Medicare is unsustainable, large companies are reaping huge profits in Australia and not paying their fair share of tax. So that transparency measure is critical. It is interesting, when we look at the government's justification for not supporting increased transparency measures amongst some of Australia's biggest private companies, to look at the Senate report into that issue, where we saw that much of the government's justification for not supporting those transparency measures was based on the contributions of an organisation known as the Family Office Institute Australia. Its submission, in large part, informed the Senate report that recommended the government shield those privately owned companies from increased transparency. One thing we learnt recently, thanks to an investigation by Heath Aston of Fairfax, is that the Family Office Institute Australia is an organisation, an entity, that has no members. The institute was established in August—specifically to fight the tax transparency laws in that legislation—by two lawyers and a Canberra lobbyist who represent Australia's ultra rich in disputes with the Australian tax office. That is according to Heath Aston. So here we have legislation in the Australian parliament dictated by a handful of lobbyists representing some of Australia's wealthiest private businesses who simply do not want to disclose their activities to the Australian public. In 2013 the tax office said that disclosure by companies with revenue of more than $100 million would 'discourage large corporate entities from engaging in aggressive tax avoidance practices'—that is, disclosure and transparency are key if we are to make progress in this area. What was the coalition's response to that? They came up with a farcical response that, in the words of University of New South Wales lecturer Jeffrey Knapp, was 'the stupidest excuse for nondisclosure I have ever heard'. It was: if we were to increase transparency and disclosure within some of these companies, we would see wealthy business owners being targeted for kidnap once the public became aware of how wealthy they were. Just imagine that—how ridiculous for the Assistant Treasurer, Josh Frydenberg, to be telling his party room, 'We can't disclose the activities and tax avoidance practices engaged in by some of these large private entities because some of them might get kidnapped.' In this business, I recognise that facts sometimes do not matter, but, if you are going to make stuff up, surely you can come up with something better than that. We learnt through the inquiry that that statement was based on no security advice provided to the government. It was effectively a veneer to try to shield some of these wealthy businesses and prevent them from disclosing how much tax was paid. And we know that this institute was only established on 6 August this year, six days after the bill was introduced into the parliament. So that is what we are dealing with here. We are going to try and fix that. Only a few short weeks ago the parliament rammed through that legislation that would protect and shield some of those wealthy private companies who are not paying tax. We are going to address it by an amendment which would undo those shocking transparency measures that the Senate recently passed. I look to Senator Xenophon and hope that he has reconsidered his position. He is an often thoughtful and reflective individual, and I am sure that now, on the evidence that he has collected, he will have the opportunity to support the Greens amendment. Private companies are being allowed to keep their tax payments secret. We are going to undo that, because we believe it fosters a culture of tax avoidance. We are also planning to amend this legislation through another measure, which would prevent global companies with a turnover of over $500 million from being able to file what are known as special-purpose accounts with ASIC. Instead of filing special-purpose accounts, which effectively allow them to, again, hide the details of their business activities and the amount of tax that they pay or do not pay, they will have to file general-purpose accounts that enable accountants acting in the public interest—those people who want to be able to scrutinise a company's accounts and transactions—to do so and to have the necessary information to be able to do it. I reiterate: it is critical that these measures are passed, that both of these amendments receive the support of the parliament, because we are engaged in a debate about how we fund things like schools, hospitals, income support and those things we know are the building blocks of a decent society. Unless we begin to address the issue of multinational tax avoidance and take on the transparency and disclosure measures that are necessary to do that, then we will not do everything that we need to to ensure that these huge companies pay their fair share of tax. With regard to these special-purpose accounts that enable big companies to hide their business activity, we know that there has been a growing trend for many of these big companies to file accounts which show shareholders and the broader public absolutely nothing about their financial state. They simply have to file this special-purpose account, ASIC agrees, and what you see is companies engaging in obfuscation. We know that there are no fewer than 20 multinational companies that have been operating in Australia that mysteriously over recent years have decided they are no longer going to provide full financial statements and instead have filed these special-purpose account exemptions. The bottom line is this: less disclosure means less tax paid. That is why this is done. Less disclosure means less tax paid. There have been many companies who have engaged in this activity. One example is Ansett, which, before it collapsed in what Michael West describes as a 'smoking corporate ruin' in 2001, changed its accounting policy from general-purpose to special-purpose reporting. That tells you everything you need to know: a company is engaged in activities and is trying to hide from the public the state of its affairs. In the case of Ansett, it was because it was about to go under, but in the case of most multinational corporations it is because it allows them to pay less tax. Interestingly, one of the few companies that has changed this is the British services company Serco. We know Serco operates immigration detention centres under government contracts, and it is the only company that has gone from special-purpose payments to general-purpose payments. Why did it do it? Because it was exposed in the public domain. It was exposed publicly, and it recognised that if it was to continue to have a social licence to operate it needed to engage in much more transparent activity. The Labor Party has announced that it will support the bill. I congratulate them for that, but they criticise the legislation because they say it does not focus on debt loading as a tax avoidance mechanism. They have a policy to tighten thin-capitalisation rules which limit the amount of debt deductions that can be claimed to the ratio of Australian equity in each company. Again, it is a small step forward, but that alone will not deal with this issue. It is not sufficient. We need a range of measures. But central to what is necessary is disclosure and transparency. The policy of tightening thin-capitalisation rules is going to be powerless against a company like Apple, because Apple buys its products at a price only a little bit below the retail price, so it has artificially small profits. That is the problem we have with that proposal. The other thing it will not do is capture big mining companies that use Singapore marketing hubs so that sales are booked to businesses that are in their tax haven and not here in Australia. We also know that the general anti-avoidance provisions in our tax code are very, very difficult to prosecute. That would require the Australian Taxation Office to prove that a transaction was entered into for the dominant purpose of avoiding tax. So, it is about intent. How does the ATO prove, without spending millions of dollars, imports to prove intent? It is very difficult, and we know that in many instances the ATO's activities have been found wanting. What the government has proposed is a small step forward. We will support it for that reason. We certainly will not get in the way of this reform. We think it has some merit but is only one small part of the response. We hope we will see support for our very common-sense amendments—amendments that go to the heart of the problem, that is, dealing with the issue of disclosure and transparency. Again, I urge the Labor Party to demonstrate that it is serious. I know Senator Dastyari has also focused his attention on this issue, describing this as 'name and shame' legislation. Well, if he is serious, if indeed the Labor Party is serious about disclosure and transparency, so-called name and shame, then, to show that it is not just a slogan and more hollow rhetoric, it will support both of these amendments. Likewise, I am sure Senator Xenophon will give these two amendments due consideration. We must undo the sneaky legislation that was passed by the coalition during the last sitting fortnight. The transparency measures would have ensured that many companies have to disclose their business activities and that those private companies now need to make that information public. We hope that that amendment will be supported to ensure that global companies are not able to simply file a special purpose account that hides their business activities simply with the aim of reducing transparency and therefore minimising their tax. In the end, these debates often appear to the community as dry economic debates, very removed from their daily lives. But this goes to the heart of the debate we are having in Australia right now about what decent tax reform looks like. Tax reform in Australia has to start with the issue of multinational tax avoidance before we go near something like the GST, because that is a basic question of fairness: why should multinational companies be able to avoid paying their fair share of tax when ordinary punters look like they will be slugged with an increased tax through the GST? I commend our amendments to the Senate.