THURSDAY, 9 NOVEMBER 2023
SUBJECTS: ATO Corporate Tax Transparency Report; Multinational tax measures; Banning of unfair contract terms; Optus outage; High Court decision.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION AND TREASURY ANDREW LEIGH: Today we have the announcement of corporate tax transparency data covering 2713 large Australian businesses. This is an important announcement, which reflects the Albanese Government's strong commitment to greater transparency in multinational tax. When multinationals pay less, Australians pay more. It's vital that Australians know how much tax our largest firms are paying. These laws were put in place by the Gillard Government despite opposition from the Coalition. The Coalition believe that this information could be kept secret. Labor believes this information should be in the public domain. Labor is committed to closing multinational tax loopholes and opening transparency. That commitment continues under the Albanese Government. We've moved to ensure that tenderers with large government contracts have to disclose their country of tax domicile. Public companies need to disclose where their subsidiaries are located. We're also moving towards putting in place a country-by-country reporting system that will be world-leading in its transparency.
Sunlight is the best disinfectant. The more information we have, the better we can be sure that large corporates are paying their fair share of tax. I want to acknowledge the hard work of the Australian Taxation Office Tax Avoidance Task Force and the work that they've done in engaging with large multinationals to make sure they pay their fair share. In recent times, we've seen agreements being struck with Rio and BHP that have seen the shutting down of offshore market hubs. Not only settling back taxes, but also ensuring that the Singapore marketing hub was no longer used in order to minimise taxes paid by those large corporates.
Labor currently has laws in front of the parliament that would close another loophole around the misuse of debt deductions. This involves companies setting up a subsidiary in a low tax jurisdiction, having that subsidiary make a loan to the Australian company. The interest on that loan is then deducted, allowing them to reduce their tax paid. Now, that's not an arrangement that's available to typical Australian small business looking to export into the region. And that means if we don't close it down then Aussie small businesses are competing with one hand tied behind their backs. The reforms we are putting in place around debt deductions aren't just about increasing revenue. They're also about fairness and ensuring fair competition. Firms should be competing based on who can offer the best products, the best service, the best offering to the Australian people and not exploiting the latest tax loophole.
One other announcement we have got today. With Minister Julie Collins, we welcome the fact that from today, laws outlawing unfair contract terms come into effect. Right now, firms can include unfair contract terms in their contracts. They're not enforceable, but it's not illegal to put those dodgy terms in. That means that small businesses are often faced with a contract on a ‘like it or lump it’ basis. That includes unfair contract terms that a small business may not be willing to litigate against the large firm. And so they comply with an unfair contract term. Those unfair contract terms might include a unilateral ability to change prices, or allow the larger firm to cancel the contract on a whim. That will no longer be possible under laws that take effect from today. This is about protecting consumers and small businesses and providing small businesses a level playing field with which to engage in a modern economy.
Very happy to take questions on either of these two announcements or any other issues.
JOURNALIST: What other measures is the government considering on multinational tax?
LEIGH: Well, the big one is moving towards the global floor on corporate taxation. For too long we've had a race to the bottom on corporate taxation, which is threatening the very corporate tax itself. The OECD Two Pillar agreement sets a 15% floor under global tax rates. That ensures that if a country has got a corporate tax rate of less than 15%, then other countries, including Australia, can collect the tax on their behalf. It is important for Australia, which derives a relatively higher share of our tax revenues from corporate tax, despite the fact that overall our tax burden is relatively low. So implementing that Two Pillar agreement is a priority for the government. We'll be among the first countries in the world to implement that agreement.
JOURNALIST: What level of confidence do you have in compliance with the tax laws as they exist right now?
LEIGH: I think the ATO is doing an important job and we're giving them more resources. In last year's Budget, the Australian Government provided an additional $200 million to the ATO's Tax Avoidance Task Force. The Tax Office is only as good as the laws it enforces. That's why the Albanese Government is improving transparency and closing loopholes. So we've got laws that are appropriate to tackling the scale of multinational tax avoidance
JOURNALIST: Do you have any comment on the High Court’s decision, overturning twenty years of precedent? What impact will that have on immigration policy?
LEIGH: As I understand the individual in question has now been released in accordance with the High Court's ruling. The ruling has just come down and so the government is studying it and will respond on its implications in the coming days.
LEIGH: We understand this is an important judgment. Naturally, we respect the judgment of the High Court -- not only as a government, but for me as a former High Court Associate. But it is a fresh judgment so we will take our time studying it and respond in detail.
JOURNALIST: Should Optus pay compensation to customers?
LEIGH: The problems with Optus are really seismic for Australia. We're talking about 10 million customers. This is the largest mobile communications network failure in Australia's history. I'd urge customers to keep receipts and it will be a matter for Optus to make clear how it is going to respond to those compensation claims. I understand that ACMA, looking into the issue. And the government has announced that we will put in place a review of how these issues are dealt with. This may not be the last outage of this kind. It's vital that Australia learns the lessons from it, and that we're able to put those in place to reduce the impact of future outages.
JOURNALIST: This report shows there are still hundreds of companies not paying tax – what would you say to those companies?
LEIGH: Those firms can answer to their shareholders and to the Australian public. In some cases, they'll have legitimate reasons for not having paid tax. But it's also important to note that the Tax Avoidance Task Force has in the past identified instances in which firms were inappropriately using debt deduction mechanisms. Where that happens we believe it's appropriate for those firms to pay their back taxes. And I'm pleased to see the Tax Office, cracking down on some of the arrangements as well, such as the abusive market hubs.
No other questions? Thanks for your time.