It is great to speak on this Greens motion. It is great to see the Greens want to take some action on corporate tax evasion. Hopefully they will support the government's bill to clamp down on R&D issues for large companies. My understanding is that the Greens are not supporting that. Certainly the Labor Party are not supporting it right now.
All these comments we are hearing today, about wanting to tax corporations more apparently, are just empty rhetoric, because we have a bill in front of this parliament right now—we heard about it during question time as well—that would reduce deductions for companies that have a turnover of more than $20 billion.
These are not small companies; these are big companies, the kinds of companies the Greens typically do not like—Rio Tinto, BHP. We have decided as a government that they should fund their R&D themselves. Indeed the Labor Party came to the same conclusion just a year ago when they were in government. But right now those changes are being held up by—wait for it!—the very people that have moved this motion today saying that corporations do not pay enough tax. We hear from the Greens about how the Tax Justice Network report shows that companies do not pay enough tax. But they do not pay their taxes because of the deductions they are allowed to make, and a big part of those deductions are to do with research and development incentives, which the Greens want to keep for big companies.
Senator Heffernan before asked for some facts, and I think that is fair enough; you should have some facts.
Senator Heffernan interjecting—
You might not like my facts, Senator Heffernan, but they are facts. Corporations in Australia pay more corporate tax, as a percentage of GDP, than almost any other OECD nation—
Senator Heffernan: "It is a global problem."
Senator CANAVAN: I agree it is a global phenomenon but we are also talking about Australia's issues here, Senator Heffernan. Our companies pay 4.5 per cent of GDP in corporate tax. It was as high as seven per cent in the peak of the mining boom. The average in the OECD—which has been pretty flat over the last decade—is three per cent; and we are at 4½ per cent. We in this country do not necessarily have a domestic issue with base erosion and profit shifting. Nonetheless, I agree with Senator Heffernan that it is a global issue that needs some action.
When we hear Senator Dastyari also complain about the ATO not having enough staff, it is another example of hypocrisy in this debate because as we learnt in Senate estimates the other day—in the economics committee, which I think Senator Dastyari was at—the tax office clearly outlined that the 4,000-odd staff that they will be reducing over the next four years are a direct consequence of the efficiency dividends placed on them by the former Greens-Labor government. The former Greens-Labor government put in place those efficiency dividends on the tax office. They did not have the guts to outline how many staff that would mean, but their reduction in funding was made under the Greens-Labor government.
With an organisation like the tax office, I am sure something like 70 or 80 per cent of their costs would be in wages, so the only way they are going to fund those efficiency dividends is to reduce the staff, and that is what they have had to do. Given the tight budget, we of course are maintaining those efficiency dividends. When the Labor government announced those efficiency dividends, they made no change to the tax that would be raised over the next few years; likewise, we have made no changes.
Both Greens senators have also raised the issue of Treasury and the fact that Mr Parkinson said in a speech last week or sometime recently that there are vested interests that are controlling this country. I am not going to dispute the Treasury on its statements in that regard but I was surprised the Green senators raised Treasury in this debate because one thing they did not raise was the evidence that Treasury gave at the last Senate estimates. Senate estimates were only three or four weeks ago. At that hearing, I asked Mr Heferen, who I think is head of fiscal group in Treasury, very directly, when we were discussing the Tax Justice Network report that Senator Milne raised earlier: do you think the report was misleading? Mr Heferen said that yes, it was misleading.
Senator Heffernan interjecting—
It was misleading, Senator Heffernan, because they mixed up, as Senator Edwards said before, gross and taxable income. They had the wrong evidence on debt and equity ratios for Australian companies using capitalisation rules. And they also included in a table the average tax rates of companies that pay zero tax including trusts as well, Senator Heffernan, and that lowered their average. So this idea there was an $8-billion magic pie out there is incorrect in regards to Australia. But if the Greens and Labor Party want to do something about corporate tax avoidance in this country, support the R&D bill, do not just support motions in this chamber.