I'm disappointed the member for Goldstein is leaving the chamber, because I wanted to start where he finished—about how he's doubled the debt under the Liberal-National government and that gross debt has now crashed through half a trillion dollars for the first time in the nation's history. I will put it on record as part of tonight's debate, while we debate these Treasury laws, that the national gross debt is at a record $540.1 billion. Net debt has doubled, gross debt has gone through half a trillion dollars and both kinds of debt are growing faster under the Liberals than under the previous Labor government. I understand the member conveniently left out of the equation, over the last 10 years, a minor international economic collapse—as we call it, 'the global financial crisis'. It was conveniently left out of the argument tonight. We will not take any lectures from the government—the alleged or phantom so-called 'economic managers' of this nation's fortunes—when our national gross debt is through half a trillion dollars and net debt has doubled. That is a fact. That's not spin; that's not messaging. That is a simple statement of fact.
I rise to speak on the Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018 and the Excise Tariff Amendment (Collecting Tobacco Duties at Manufacture) Bill 2018 before the House tonight. They concern the black economy and collecting tobacco duties, both of which will have a positive effect on the nation's budget, which is a rarity when it comes to this government. On this side of the House, we support measures to tackle the black economy, which refers to people who operate entirely outside of the tax and regulatory system or who are known to the authorities but do not correctly report their tax obligations. It encompasses a wide range of practices which, at the end of the day, penalise honest taxpayers, undermine the integrity of Australia's tax and welfare systems and create an uneven playing field for the majority of small businesses, who are doing the right thing. Labor welcomes the government extending the use of measures introduced by the previous Labor government to tackle tax avoidance in the black economy, such as those we are debating today.
I want to spend some time going through the schedules, as the previous speaker seemed more intent on giving us a history lesson than actually talking about the bill tonight. Schedule 1 of the black economy bill denies an income tax deduction for certain payments if the associated withholding obligations have not been complied with. Withholding payments such as pay-as-you-go earnings can currently be claimed as a deduction even if the required withholding obligation has not been met. Schedule 2 of the black economy bill requires entities providing road freight, IT or security, or investigation or surveillance services that have an ABN to report to the ATO information about transactions that involve engaging other entities to undertake those services for them. This is an expansion of the taxable payments reporting system introduced, as I said, by the former Labor government for the construction sector, which has already been expanded by the government to courier and cleaning services, with this side of the chamber's support.
Both of these measures were recommendations of the Black Economy Taskforce's final report, which was handed down in October last year. I want to read to the chamber the chair's remarks in that report:
The black economy is a significant, complex and growing economic and social problem. In our opinion, it could have increased in size by up to 50 per cent since 2012.
The report also mentions:
In 2012, the Australian Bureau of Statistics estimated that the black economy equated to 1.5 per cent of GDP, with the illicit drug industry adding a further 0.4 per cent of GDP. This estimate is now outdated. We consider that the black economy could be as large as 3 per cent of GDP (roughly $50 billion)—
Think about it: $50 billion!
given the trends we identify in this Report—
which I believe is a fairly accurate measure. Whilst Labor welcomes the government's efforts to crack down on the black economy, I believe there are some sneaky measures contained in these bills. The sneakiest thing of all in the most recent budget is taxing tobacco 12 weeks earlier, upon entry into Australia, rather than when it leaves the warehouse as at present. This will boost tax receipts once and once only, in 2019-20, by $3.27 billion, which is convenient because it means the government is able to pull a rabbit out of a hat and return the budget to surplus a year early. What a coincidence, as Deidre Chambers would say. Without that timing trick, the return to surplus would be pushed back a year to 2021. Let me remind the House that this is a government which came to power on the back of a supposed debt-and-deficit emergency, which no longer seems to ever, in any shape or form, raise a mention from those opposite. We had debt trucks driving around Australia. We had billboards, leaflets, direct mail letters and TV ads about the debt-and-deficit emergency in Australia. Perhaps it's not mentioned now, because this government has taken a wrecking ball to the nation's budget and things have blown completely out of control since then.
I would like to put on the record that despite the member for Goldstein's valiant efforts he is in a state of denial when we talk about the budget blowout being four times worse than forecast in the Liberals' first budget. Gross debt has crashed through half a trillion dollars, net debt has doubled since they came to office and both kinds of debt are growing faster under the Liberals than under the previous Labor government, which we all know had a global financial crisis to contend with. Keep in mind that there have been very favourable global conditions and billions of dollars of extra revenue rolling into the budget, and the government has still managed to substantially worsen the budget position. So that's right—things have picked up, but the budget position has got substantially worse.
The world is taking notice of this as well, with the IMF last week downgrading the economic growth expectations for Australia and raising several risks for our future outlook. With heightened global challenges on the horizon, the IMF is urging countries to build up 'fiscal buffers' and, urgently, to adopt policies for strong and inclusive growth. Well, if the government is going to produce this strong, inclusive growth they had better get cracking. Wages growth, as we know, remains at historic lows, coming off an all-time high record of around 1.9 per cent last year, which we know has led to inequality being at a 75-year high.
I want to say clearly tonight, on the record, that this is not a government for working Australians. This is a government for the top end of town and which is out of touch with what the community expects. But there is an alternative, with this side of the chamber bringing cumulative services over the forward estimates. We will have a better plan to pay down debt and to put the budget on a more structurally sound footing with reforms that, as we know, are being outlined by the shadow Treasurer and the shadow Assistant Treasurer around a whole range of issues pertaining to negative gearing, capital gains tax, dividend imputation and trusts.
I want to talk briefly in the time remaining to me tonight about the government's inaction on offshore tax havens, and I thank the member for Fenner for raising the second reading amendment. Globally, around $600 billion of profits are estimated to be shifted to tax havens, representing almost 40 per cent of multinational profits. Tax havens are used by drug runners, extortionists and money launderers. Basically, they are used to hide fraud, corruption and tax evasion. According to one estimate, around four-fifths of money in offshore bank accounts is there in breach of other countries' tax laws. So the government must start taking action on tax havens.
Again, I say to the government that we offer to work in a constructive, bipartisan way on that. I call on them to adopt Labor's comprehensive package of tax haven reforms. I will briefly go through those and put them on the record tonight. They include an integrity measure, targeting people who shop for citizenship in tax havens. Under this system, passports or citizenship for sale by tax havens are deliberately structured to undermine the OECD's base erosion and profit-shifting program, particularly the Common Reporting Standard. Under a Labor government, if we are privileged to be elected, all individual Australian taxpayers would need to notify and declare to the ATO if they have residency or citizenship of any other jurisdiction, and the name of that jurisdiction.
Other measures of Labor's tax haven transparency include: mandatory shareholder reporting of tax haven exposure; government tenderers must disclose their country of tax domicile; all firms tendering for Australian government contracts worth more than $200,000 must state their country of domicile for tax purposes; developing guidelines for tax haven investment by superannuation trusts; and establishing a publicly-accessible register of the beneficial ownership of Australian listed companies. This will allow everyone to find out who really owns our firms. Shareholders should not be able to use complex structures and sham ownership to avoid complying with corporate transparency rules. There are also public reporting of country-by-country reports, whistleblower protection and rewards and ATO disclosure of settlements and reporting of aggressive tax minimisation. When revenue gets lost to tax havens Australians ultimately have to pay higher taxes or suffer cuts to vital services.
In closing, Labor welcomes the introduction of these bills by the government and we support these measures to tackle the black economy. Despite the government slipping in some accounting tricks, as we've identified tonight, to enhance the budget's bottom line for a single year, I'm happy to say that these measures are sensible and practical in order to crack down on the black economy. But I close my remarks tonight by saying that we on this side, under the leadership of the Leader of the Opposition, the shadow Treasurer and the member for Fenner, recognise, and will continue to make sure, that the work still to be done is done, because more work still has to be done in this area.
