A standoff between the two houses of parliament threatens to thwart a government-backed crackdown on multinational tax avoidance and a Labor-backed plan to increase tax transparency.
The treasurer, Scott Morrison, told the House of Representatives on Thursday the government would not accept the “cobbled together, last-minute, back-of-the-envelope” amendments that the Senate made to the Coalition’s multinational tax package on Wednesday.
The changes made by Labor, the Greens and four crossbench senators would reintroduce a version of the tax transparency measures for big Australian private companies that were wound back only last month.
The Coalition’s policy is to shield Australian-owned private companies from a Labor-era requirement for entities with annual turnover above $100m to publish details about their annual revenue and the tax they pay in Australia.
The government’s decision to reject the transparency amendments entrenches a standoff between the upper and lower houses, putting a cloud over the government’s budget measure targeting multinational tax avoidance that was due to begin on 1 January.
“I move that the amendments be disagreed to,” Morrison told the lower house, accusing the opposition of failing to act in good faith.
“The Senate, on the run at the last minute, has sought to dramatically amend this bill and include a raft of peripheral additions ... this is a very shabby process that cannot be supported and should not be encouraged ... this is the type of cynical, old politics that Australians are sick of.”
The Greens MP Adam Bandt said: “To come in here and call it a shabby process shows us really what is motivating this government. Only a blue-blood government with a born-to-rule mentality would call democracy a shabby process.”
The shadow treasurer, Chris Bowen, said the government was creating a dispute between the houses by refusing to accept the transparency measures.
“From time to time governments lose votes ... and the treasurer has to get used it. You lost a vote, get over it,” Bowen told Morrison in parliament.
“You lost the support of the crossbench. It happens. It’s not a ‘shabby process’, it’s called democracy, it happened to us from time to time when we were in government, we had to deal with it, it’s called losing a vote.”
Bowen said the upper house was not impressed by the tactics employed by supporters of the government’s position.
He pointed to revelations about the Family Office Institute Australia, which gave a submission to a Senate committee in support of shielding big private companies from the disclosure rules.
“It turns out that Family Office Institute has no members and is what is called an astroturf organisation,” Bowen said. “The Senate was less than impressed with that shabby process and the Senate voted last night.”
The government announced in the 2015 budget that it would give the Australian tax office greater powers to stop global companies using “artificial or contrived arrangements” to avoid tax obligations – but the Senate passed the legislation only after making an amendment relating to tax transparency.
The Coalition’s setback in the Senate on Wednesday followed Labor’s procedural bungle last month, when it did not call for a voting division on the government’s earlier bill to revoke the requirement for big Australian-owned private companies from having to publish details about their tax affairs.
Wednesday’s amendments would reintroduce the transparency obligations for big companies, while providing an avenue for firms to apply to the tax commissioner for an exemption on a case-by-case basis.
The company would need to convince the commissioner “that to make the information publicly available may be significantly prejudicial to any of the entity’s current or future commercial negotiations”.
In a written statement of reasons for rejecting the amendments, the government said it would be inappropriate to require the tax commissioner to make such decisions.
“The tax office is not equipped with the expertise to assess the commercial sensitivities of company negotiations,” the statement said. “The Senate amendment would require the ATO to divert resources away from its core activities, which is not in the public interest.”
But Morrison did not rule out a policy shift after his planned meeting with the tax commissioner, Chris Jordan, to discuss “potential unintended consequences” next week.
“The government is not rejecting the consideration of the issues raised in these amendments but the appalling process that has produced these amendments,” Morrison said.
Parliament rises on Thursday, with only two further sitting weeks scheduled before the summer break, providing limited time for the multinational bill to be reworked before 1 January.
The amendments were moved by the Greens senator Peter Whish-Wilson after protracted negotiations with Labor and crossbench senators, and passed the Senate 32 votes to 29. The independent senator Nick Xenophon was a key player in achieving the compromise.
Xenophon said he had “reluctantly supported” the government’s bill last month because he feared disclosure could harm suppliers to Coles and Woolworths, but conceded he did not have all the information at the time.
“I apologise to the Senate because I did not do my due diligence as I ought to have in relation to that piece of legislation,” Xenophon said on Wednesday.
Bills need to be passed by both houses of parliament before they can receive royal assent and take effect.
