HOUSE OF REPRESENTATIVES, 15 JUNE 2020
Louis Brandeis famously said that sunlight is the best disinfectant, and the issue we're facing here is squarely an issue of sunlight.
As the member for Mayo has highlighted, it's also an issue of consistency. Why should a company that was formed before 1995 be treated differently to a company formed after 1995? The coalition likes to talk about new businesses and about the importance of level playing fields. Well, this is the very antithesis of that. This is advantaging older businesses and it's tilting the playing field towards them. Why should 1,500 firms that were established before 1995 have access to a different transparency regime than every other private firm? It makes no sense whatsoever and it is a bizarre quirk of history.
As the member for Whitlam and the member for Kingsford Smith have outlined, the grandfathering provision was put in place in 1995. It was intended to be temporary. But the next year the Howard government won office and made a temporary grandfathering measure permanent. We're now 25 years on. The grandfather has become a great-grandfather, and it is time to get rid of it. Labor supported the removal of this grandfathering provision in 2015 when former Senator Ricky Muir, backed by Nick Xenophon, moved it. I note in passing that at the time the Greens did not support that measure in the Senate. In 2018 the Greens had had a change of heart and moved for the abolition of this exemption. Labor, again, consistently supported it.
I note, as other members have said, that ASIC supports the removal of this exemption. How could they not? It is a simple matter of consistency. The private companies on this list are not tiddlywink firms; some of them are significant entities. As a Guardian report from 2018 highlighted, a sixth of them are government contractors or political donors. It is only right that they should be subject to the same reporting regimes that a new firm has to sign up for. As a matter of consistency and basic ethics, it makes no sense whatsoever to allow these firms to hide under the cloak of darkness. Firms can't even get themselves off this list if they want to. Former Prime Minister Malcolm Turnbull reportedly attempted to get one of his companies off the list of 1,500 and was unable to do so. It is a bizarre anomaly, intended to exist for a few years in the 1990s, which persists on the books of our tax laws today.
Labor's stance in favour of transparency on this issue is consistent with our fighting for tax transparency across the board. As the member for Kingsford Smith has noted, it was Labor who put in place tax transparency for Australian firms, saying that firms with a turnover of over $100 million should be required to disclose through the ATO total income, taxable income and tax paid. But that was wound back for two-thirds of private companies by a dodgy deal between the Liberals and the Greens that took two-thirds of the large private firms out of the tax transparency net. The Liberals have made some bizarre claims over the years about the impact of transparency, suggesting that it would cause kidnap risk—suggesting that it would somehow cause a flight away from private firms. I haven't seen any evidence that that has come to pass with the firms that have been disclosed. That is why Labor took to the last election a policy to restore the $100 million threshold for private firms.
We also took to the last election policies to make country-by-country reporting public; to offer US-style rewards for whistleblowers who report entities evading tax to the tax office; to require that if a firm is doing business in a tax haven it disclose that matter to its investors as a material tax risk; and that a firm that wants a government contract should disclose, through the tendering process, its country of tax domicile, so we can ensure that firms that are located in tax havens disclose that to the Australian public. We required public reporting of AUSTRAC data showing aggregated cash flows sent to overseas jurisdictions, including tax tax havens; and that the dodgy phoenix directors would be named and charged.
Labor stands for tax transparency.
Authorised by Paul Erickson, ALP, Canberra.