HON. WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY
RESTORING CLASS BALANCE – BARGAINING POWER AND FULL EMPLOYMENT IN THE 21ST CENTURY
WEDNESDAY 14 JUNE 2017
***CHECK AGAINST DELIVERY***
I think it is fair to say that the government has bungled the management of this bill and this issue from the very start. The policy issue of ensuring overseas retailers are put on a level playing field with Australian retailers when it comes to the GST has been around for a long time. And I do think Australian retailers are 100 per cent right when they say they should not face a GST cost disadvantage to overseas or online retailers. Labor MPs—and, I am sure, government MPs and the Treasurer's office—have experienced a parade of stakeholders criticising this bill from every angle. In fact, it is pretty hard to find anyone who thinks this bill is in its entirety worthwhile, although people do support the objective of the legislation.
We are concerned about issues surrounding the implementation of the measure, particularly as to how the GST should be collected. We want to see a model that is workable and is able to be complied with, one that does not impact adversely on consumers. That, of course, is one of the reasons we are moving in our amendment that the bill should be delayed for a year. But it is true that there is in-principle support for this proposal, I think across the entire parliament. Labor does support a level playing field for Australian businesses, which this measure intends to do. We simply do not have the details right.
I think this bill will pose many dilemmas—dilemmas in terms of implementation and dilemmas in terms of compliance. These will be faced both by the boards of companies and by the tax office. For example, the government expects a compliance rate of only 25 per cent. This is a very significant law and it will place the tax office under a lot more stress when it is at a moment in history where it has bigger fish to fry. Surely, the tax office must have some higher priorities as it grapples with rampant multinational tax avoidance, for example, such as we have seen from companies like BHP, Rio and others. Over the last 18 months, for example, it has become very clear that BHP's management has engaged in activities for over a decade that can only be described as tax evasion. How will this bill relate to their activities in that area? Two weeks ago BHP CEO Andrew Mackenzie was questioned on The 7.30 Report about BHP's tax evasion and why, given the revelations of recent times, the Australian public should take BHP's calls for lower tax seriously. As we have come to expect, Mr Mackenzie did not address the question, instead choosing the excuse that BHP already pays a lot of tax in Australia. Well, Mr Mackenzie, you do not get to choose how much tax you pay. You don't book $5.7 billion in profits through a Singapore tax shield and then get to call yourself a responsible corporate citizen. Quite frankly, paying a lot of tax is not good enough. If you operate businesses here and you benefit from the institutions, human capital and infrastructure provided by and nurtured by the government of Australia then you have an ethical obligation to pay all of your tax, to pay your fair share of tax. When I first called out BHP's activities, in 2015, I did not blame the CEO or the board. Fierce competition and the pressure of the market can drive people to make many poor choices. But, now, almost two years later, BHP remains defiant in its refusal to accept any responsibility or acknowledge any wrongdoing.
This brash, arrogant and self-righteous attitude, which we see too frequently in too many of our boardrooms, is typical I think of a malignant culture that has emerged in corporate Australia. Why should the Australian parliament and the Australian public accept being talked down to by corporate Australia, which, over the past 10 years has not only engaged in rank short-termism and shameless selfishness but in some cases outright corporate negligence and malpractice. Take BHP, which, under the leadership of current CEO Andrew Mackenzie, former CEO Marius Kloppers and board chair Jac Nasser, has undertaken projects that have destroyed capital on an absolutely massive scale. Accordingly to our advisers, in recent years BHP's management has undertaken projects that have reduced shareholder value by US$40 billion: US$23 billion in write-downs in their US petroleum venture; US$8 billion spent on petroleum exploration, with no apparent value created; and US$9 billion spent on share buybacks at inflated prices. Unfortunately, the self-righteous leadership of BHP shows no sign of remorse or contrition and has instead opted for a public relations exercise, spending $10 million of shareholders' money rather than reforming their corporate governance and recognising their corporate responsibility.
If BHP were serious about corporate leadership, about meeting their ethical obligations, they would immediately shut down their Singapore marketing hub. There could be no clearer signal from BHP leadership that they are willing to close this chapter and begin a new one were they to embrace their role as 'the big Australian' and lead by example. I have previously called for BHP to do this, and I was rejected on the grounds that BHP's marketing hub does provide value. However, even an aggressive tax arbitraging hedge fund like Elliott Advisors says that it ascribes 'no value' to this structure and notes that 'the termination of this structure would be in line with efforts to regain the trust of its various stakeholders'.
BHP has once again rejected this assertion. As I see it, this means that there are two scenarios. Either Elliott Advisors is correct, and BHP's Singapore marketing hub creates no value and therefore should be shut down, or BHP's marketing hub does create value through tax evasion and should therefore be shut down. In either scenario the only responsible action from BHP's corporate leadership is to shut down its Singapore marketing hub. But BHP has failed to come clean on the evidence that its boardroom culture is selfish and rank with malpractice. Like other multinationals, it has been involved in a deceptive race to evade tax, to suppress wages and to casualise its workforce.
Now, at some point the directors of BHP have to accept responsibility for the actions of the company. Earlier this year I called on those who had been found guilty of tax evasion to be stripped of their Australian awards. This Queen's Birthday Honours, early in the week, brought the whole issue of corporate ethics and Australian honours into very clear focus. Not every Australian honour is created equal. If you asked the person in the street who is more deserving of an award, would they choose the couple who fostered 380 children over 40 years or a business person who has paid millions and who is recognised for their services to business?
There are many worthwhile people recognised in the awards announced earlier in the week—worthwhile business people who have donated a lot of money to charity and have worked hard to make our community better, and I acknowledge their efforts. But I think it is beyond the pale when the chairman of a company that is in dispute for more than $1 billion to the Australian taxpayer receives the nation's highest honour. BHP has been systemically avoiding tax through the creation of its Singapore marketing hub, depriving the Australian people of their just returns on their taxes and royalties on the minerals they own 100 per cent. This structure sends a signal to every other Australian business that it is okay to create offshore structures to cheat the Australian Taxation Office. It is high time we asked the Honours Committee to check in with the ATO before handing out gongs to business people. Anyone without the cleanest of clean sheets from the ATO should have their awards deferred until they are certified as having a clean bill of health.
So, this whole issue of enforcement, this whole issue of compliance which is raised in the bill before us today is so critically important. If the Australian people are to have faith in the government of Australia and if they are to have faith in the administrative systems and particularly the tax system, then they need to see that everybody is paying their fair share. And when they see people who are worth billions not paying their fair share, they lose trust in the political system, they lose trust in the processes of politics and we see the polarisation of and disillusionment with the political system get worse and worse. Therefore it is very important that on these issues of evasion and compliance the Australian government puts in place the best systems to ensure that everyone is treated equally. Sadly, this bill today, with such a low compliance outcome, is not up to the task either.