It was less the last sitting day of Parliament as the last standing-and-shouting day, as Labor cried foul at a furtive eleventh-hour deal the Greens had struck with Treasurer Scott Morrison last night to pass the government’s corporate tax bill in return for two amendments ensuring greater transparency from multinationals and billionaires.
“A dirty deal,” tweeted Penny Wong, “Eric Abetz and Richard Di Natale voting together. The new Greens.”
Labor, too, had worked hard to legislate these amendments. Their angst was understandable. In political terms it was, as the chairman of the Inquiry into Corporate Tax Avoidance Sam Dastyari framed it, a treacherous compromise, before he had a laugh and conceded the outcome was not too bad.
In terms of public interest, however, this was the quintessence of democracy. Tax fairness, as an issue, has come to the fore. The senators had resisted the tyranny of the House, as they ought, and acted collectively in the interests of their electors.
The government nearly pushed its Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 through Parliament last month. But it was blocked in the Upper House as the Greens, with the support of Labor, insisted the infamous “Kidnap Amendment” – which shielded large Australian private companies from disclosing their financial details – be overturned. It was a sweetheart deal for billionaires.
The day before, independent senator Nick Xenophon carried the crossbench, and Labor and the Greens, too, on an amendment to force foreign multinationals to the same standards of disclosure as companies listed on the Australian Securities Exchange.
The government lashed out at both amendments and threatened to kill its entire tax avoidance bill just to jettison them.
Though Labor, the Greens and independents did not back down. During the next two weeks, the government realised the impasse would leave it with nothing to show on the tax reform front for 2015, unless it struck a deal. And so it did, a deal not too materially different from the one Labor had supported; though the threshold for private company disclosures has doubled from $100 million to $200 million.
As for multinational financial reporting, there are a few tweaks but it is close to the amendment proposed by Nick Xenophon.
Essentially, the Greens had traded a doubling in the revenue threshold for billionaire disclosure in return for the Treasurer agreeing to the multinational transparency measures. And so the bill has passed.
Now multinationals will be required to produce General Purpose financial statements, instead of the skimpy Special Purpose variety with which they conceal their dubious transactions with associates overseas – although under the compromise they may not have to report until 2018.
As for the Kidnap Amendment – the government had swallowed the line from lobbyists that billionaires were in danger of being kidnapped if they revealed their revenue and tax information – its $200 million threshold is expected to capture 281 companies rather than the 700 to 800 for which Labor was holding out.
As Sam Dastyari put it of the Greens deal, “They blinked too early”. Still, both amendments will bring greater transparency. The billionaires will be aghast at having to disclose how much tax, if any, they pay.
And as one tax lawyer told Fairfax Media this week, they will already be on the phone to their lawyers asking for the best restructuring advice money can buy. Now the game will be hiving off bits of their business – putting the decent taxpaying stuff on the record – and burying the dicier elements into separate entities to get below the $200 million threshold.
Nonetheless, the very visibility of their tax expense, this simple transparency measure, will ensure more tax is paid. For their part, the multinationals have some wriggle room in their amendment, given its vague wording, but the net is closing.
It is thanks to the Senate. This marks the culmination of the Senate Inquiry into Corporate Tax Avoidance, in which the giants of big pharma, the tax dodgers of the digital new guard, the world’s biggest oil and gas companies and the Big Four audit firms have all been called to appear and justify their involvement in suspicious tax schemes.
The Tax Justice Network was also happy with this week’s events because passage of the bill means the “country-by-country reporting” transparency measures – which require multinationals to reveal their revenues in the jurisdictions in which they operate – are likely to come into effect next year.
Had the law not been passed today, it may have been another year before it came into effect.
And so the high drama of yesterday’s political points-scoring will soon be forgotten and the senators and their staff, having traded barbs all day, will be trading a well-deserved evening cold one.