Senator WHISH-WILSON (Tasmania) (17:47): I certainly look forward to addressing the issues that Senator Xenophon has raised when we get to the committee stage and consider the specific amendments to the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015. What we are dealing with here today is a significant matter of public interest. It has literally taken years of work by a very large alliance of people, stakeholder groups, to get us here. I remember being visited three years ago by Micah Australia, one of the groups, as well as the Oaktree Foundation and the Tax Justice Network Australia. We are talking about broad alliances of really interesting groups. There were also some church groups and social enterprises. There was a whole range of different organisations that came and, in a really non-political way, in a very gentle but very persuasive way, talked to all of us—I am sure it was all of us—about taking on multinational tax avoidance. What we have here today is the first product in a pipeline from the hard work and efforts of significant coalitions of community organisations. It represents the whole idea of trying to reduce tax avoidance and even tax minimisation to make a fairer taxation system for everyone. It is a really big matter of public interest. While I accept that there may be valid reasons that people like Senator Xenophon have concerns around, for example, the Greens amendment because a few special interests—they may be valid—may potentially be negatively impacted. I think if you weigh that up against the public interest that we are dealing with here today, the decision is actually very simple. I like Senator Xenophon; I would not take away his commitment to the supermarket sector. I hope we get an effects test through or other policies— Senator Xenophon: Good luck with that! Senator WHISH-WILSON: There are lots of other ways to tackle that. Getting back to the legislation before us today, it is the first product in a pipeline in which we, as a parliament, are committing to try to tackle the issue of tax minimisation and tax avoidance head-on. Following that community lobbying—I would not even call it lobbying; I would say 'consultation'—where these people came to us and said, 'What can you do about this?' we had a very in-depth and long Senate inquiry, which one of my predecessors, Senator Milne, was actively involved in. It was her inquiry; she initiated it. Senator Dastyari has done a very good job as chair of that committee. All hats off to Sam; there is no doubt about that. He has been ruthless in pursuing large multinational corporations, as have Senator Milne and other members on the committee in terms of seeking the information that we need to try to gauge the extent of tax avoidance in this country. I do not think I would be underestimating it to say that we have all been quite troubled by the evidence that the committee has uncovered. It is fair enough to pay credit to previous Treasurer Joe Hockey for bringing this amending legislation forward. But the political reality is that it has taken an extraordinary community campaign and a very lengthy Senate inquiry that uncovered a lot of contentious issues around this to get the government and the Treasurer to the point where we have some legislation. This legislation, as has been said by a number of speakers, certainly is not perfect. It does not go anywhere near far enough to solve the problem, but then, like a lot of complex problems, we need a whole tool kit of solutions to address it. This is one that is certainly worthy of our consideration, and the Greens will be supporting the amending legislation that requires corporations with revenue of over $1 billion—we call them significant global entities—to make certain disclosures. They would be required to give statements to the Commissioner of Taxation regarding their global operations and activities, including how their income and activities are distributed across various countries. These are the kinds of things that are being talked about in the G20 and the OECD forums around information sharing on tax minimisation or tax avoidance by global corporations It is a good thing that we are starting to get disclosure at home and demanding that disclosure. That is because, as has also been said, with that disclosure comes the potential for significant reputational risk and reputational risk is an important factor for corporations when they consider their standing not just in the business community but in the broader community. This bill will also give a limited ability to object to taxation rulings made by the Commissioner. Corporations will face a double administrative penalty if they are found to be avoiding Australian tax. Essentially, this bill will double the punitive measures that are in place if corporations are found to be avoiding tax. We will also see that companies with this turnover will be brought under the general anti-avoidance rules, with the ATO commissioner able to consider foreign tax laws when determining whether they are reasonable alternatives to the tax scheme that they have entered into. In theory, these rules look good. But what concerns me the most about this bill—and it has not really been talked about by any of the speakers that I have been in here listening to—is the huge cuts that the Australian Taxation Office and the workers at the Australian Taxation Office have incurred in recent years under this Liberal government. We have seen the axing of nearly 4,400 jobs at the Australian Taxation Office since the Abbott-Turnbull government has been in place. There is absolutely no doubt that those staffing cuts have hit the government's ability to police corporate tax avoidance; a quarter of those staff losses have come from the audit office, which actually does the work around tax avoidance and other kinds of shonky behaviour. The cuts embolden corporations who are looking to shrink the amount of money they pay to us. The union representing the tax office, the CPSU, put in a submission to the Senate inquiry. Remember that these public servants cannot talk to us about this, but the unions can. The unions get around and talk to their members, and they can speak on their members' behalf. Let me tell you: they have spoken on their members' behalf and they have been really quite blunt about the effect that these cuts have had on their workers. They have also talked about their concerns around tax avoidance and the information we have seen in the Senate committee. They commented: Frontline officers fighting tax evasion tell us that transfer pricing, profit shifting— And profit shifting is often associated with base erosion and transfer pricing— and the use of multiple trust structures were amongst the most prevalent forms of tax avoidance. The cards are stacked against tax officers and in favour of those who seek to avoid paying their fair share. That is not the right way round. It's a rort that should end immediately. That was from CPSU President Alistair Waters. It has been said: One area of acute embarrassment for the government is that around a quarter of the ATO’s redundancies have come out of the audit area… Those people who have been made redundant have been let go by the tax office, but how does the tax office replace those skills, especially in a marketplace where the tax department is already bleeding some of its key specialists to the private sector? In Melbourne in the Senate Economics Committee, the evidence we heard on this from a previous high-ranking commissioner within the tax office, was that they lose their best talent to the private sector. Their best talent goes to work for big lawyers who deal on behalf of multinationals, and the tax office ends up taxing multinationals by settlement by negotiation, because the tax department does not have the resources or the expertise to take these companies on. When we look at the legislation we see that, in relation to these companies, the commissioner has the ability to object to the taxation rulings and that he or she can double administrative penalties if these companies are avoiding tax, but you have to find that they have avoided tax in the first place. The evidence was overwhelming that that is really difficult to do. So the situation is quite appalling in this country: the evidence the Senate heard was that our tax office taxes by negotiation. These court cases are lengthy, they are expensive and they are dealing with very wealthy multinationals with very deep pockets and the best legal guns for hire. Some of those legal guns used to work at the ATO and they know their stuff, and this is a significant issue. So if we want to invest in preventing tax minimisation and tax avoidance then we actually need to invest in the ATO. We need to actually have the resources in place to make sure that this legislation that we are looking at today actually works. So, in terms of cutting the ATO and staff at the ATO, we actually need to put those resources back in. Let me give you a couple of other quotes. The CPSU president said: Cutting the guts out of the agency that is responsible for bringing in much-needed revenue makes absolutely no sense at all. We are calling on the Government to restore funding in the upcoming Budget to ensure that Tax staff can do their job and provide the revenue that society needs to fund the ever-increasing demand for services. Demand for services continues to rise, while the number of staff goes down. It doesn't add up. The CPSU submission to the Senate inquiry said: CPSU members report that [the level of audit job cuts] has significantly impacted the ability of the ATO to investigate matters. This is coming from members within the CPSU: Quite simply, they report that fewer audits are being conducted (impacting negatively on revenue), and there is reluctance to review and/or audit larger and more complex entities. Which is exactly the evidence we heard in the Senate inquiry in Melbourne, and that was in the formal submission that the unions made to the Senate inquiry. So we must deal with the ATO's resourcing as well as bringing in new legislation if we actually want the legislation to work. In the seven minutes I have left and before I move on to address the amendments, let me just say that we know that the Labor Party had some other ideas about how to tackle the area of multinational tax avoidance with new thin capitalisation rules. These rules limit the amount of debt deductions that can be claimed against the ratio of Australian equity in each company. These are things that, from my previous life, I am very familiar with. Hopefully, through the G20 and the OECD, information sharing will happen on other issues around transfer pricing—or should I say 'mispricing' to be technically correct. That is where we see the allocation of income and expenses between operations and subsidiaries of operations to reduce tax. In the inquiry we heard some great examples of that around our mining companies and their Singapore, shall we say, 'marketing' or 'trading' operations. This where most of the profit is booked out of those operations and then the company claiming that is the appropriate place to book those profits. Guess what? Singapore has a much lower tax rate than Australia. These are the kinds complexities which the tax office has to grapple with when taking on some of the big potential corporate tax avoiders. The Senate recommendations are not out yet, but I think it is pretty clear that a large number of the companies that gave evidence have been, if not minimising tax legally, sailing very close to the wind of being tax avoiders. The amendments that we are putting up today are simple. Obviously, $1 billion is a significant turnover for most corporations. The Australian Greens would like to deal with two things. We would like to deal with the issue that the journalist, Michael West—whose name has been mentioned several times so far in this second reading debate—has written an excellent article on, which is the fact that many global companies are shirking their disclosure obligations by becoming special purpose entities, which then allows them to reveal minimal financial details. We do not want them to be able to do this—clearly. They have to have greater disclose in their financial reports in the form of consolidated general purpose accounts so that forensic accountants can have a decent look at whether they are paying tax and whether it is all in line with the public interest. It also gives a better idea of profit-shifting. It can give a better comparison of global rates. This is obviously a failure of ASIC, because they approve these companies to become special purpose companies, which, once again, then allows them to lower their reporting requirements. Disclosure is something we want to see, but we want it to be on $500 million, not $1 billion. The argument that somehow $1 billion is a magic number for this does not work for us. We would like to see it on $500 million. In my last four minutes—and I will not spend too much time on this matter because we will deal with it in committee—the Greens would like the opportunity today to regain what we lost a few weeks ago. We had a confluence of events which led us to lose the fight over the tax transparency bill—or what Michael West has dubbed the 'rich mates amendment bill'—which was brought forward by this government to allow those corporations or individuals earning over $100 million not to disclose some basic data. Once again, the same principle applies: disclosure is very important, as is reputational risk. It is a good place to start. It is not going to necessarily stop tax avoidance but it is a necessary measure, and this kind of legislation is exactly what the alliance of community groups that I mentioned earlier have been asking for. We do not want to encourage people to hide their tax from the public view. It is not to say that these wealthy companies and individuals are hiding their taxes—it is not to say that at all—but the best way to dissuade tax avoidance is to threaten reputational risk of prominent companies and individuals, who cannot afford to have that paraded in public. If they are doing nothing wrong at all, they will not mind their information being put out there in the form of a disclosure. So we will bring that measure back, and then at least we can have the discussion which we failed to have because the speaking list collapsed. Several of us, including me because I was in the chair, did not get to debate that bill and, of course, we did not get to vote on it either. We believe that was a missed opportunity. It was something the public wanted to see. The legislation did cause a huge outcry when it was passed. A number of people were quite surprised that it was supported by those on the crossbenches. Something that I will deal with when we get to the committee stage is the idea that we were 'astro-turfed' by a front company. As I described it to the media, we were 'hijacked' by special interests. This is a significant matter of public interest. That we were hijacked by the special interests of a front group was embarrassing. It was frustrating, and I was angry when I found out about it. I was not on the Senate inquiry when this group appeared. Nevertheless, as a senator, I think we all have to take a collective responsibility for being duped. We could have easily asked questions or done some research on what this organisation was and who it represented. In my opinion, this would have no doubt had a bearing on the senators and their vote in this chamber. I hope tonight that they reconsider their position, reconsider this legislation and bring it back and pass it into law. We know that the effect of special interests is alive and well in this parliament. We all deal with it from day-to-day, but this is a particularly acute and, I think, disturbing example of how those with the resources and the ability to bring together specialists can lobby and influence outcomes. I am certainly going to be a lot more careful in future and find out a lot more information about witnesses right across the board that we confront in inquiries. I was quite happy to admit on the public record that I felt like we had egg on our faces and that we needed to clean that off. Actually, tonight is when we should clean that off. We should bring that legislation back in the form of an amendment. I would expect the support from those senators whom I have spoken to who were also embarrassed and angered about that revelation. May I put on the record what I think is a very good piece of investigative journalism by Heath Aston from Fairfax. We do not often see that kind of investigative journalism as much these days; it is really important information that the Senate can now incorporate into its decisions and votes. I would urge all senators to support the Greens' amendment, which brings back that legislation and gives us a chance to debate it in committee and pass it into law. That is exactly what the Australian public want to see; they want to see us take a strong approach to tax avoidance.