Government must cooperate on multinational tax reform - AM Agenda

E&OE TRANSCRIPT

TV INTERVIEW

SKY AM AGENDA

MONDAY, 19 OCTOBER 2015

SUBJECT/S: Polls; Multinational tax; China Australia Free Trade Agreement; Tax transparency; Australian Building and Construction Commission.

KIERAN GILBERT: This is AM Agenda, with me now is the Shadow Assistant Treasurer, Andrew Leigh. Good to see you. I know you don't like talking about polls that much; you never have. But this one is pretty clear in terms of every category: in terms of the leadership attributes, the primary vote, the two-party vote, the preferred Prime Minister. It's all showing that people are quite pleased to have Mr Turnbull in the top job. 

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Yes, Kieran. I don't like talking about polls mainly because it takes us away from the deeper conversations about issues and ideas that I know you care about as well. I think what this shows is that Malcolm Turnbull has been campaigning as a Labor member on the streets: he's been talking about the issues of cities; and about start-ups, which Labor has been on about for years. The problem is that when he gets to the Parliament, he still votes like a Liberal. He still votes for tax secrecy rather than tax transparency; he doesn't seem to have any proposals on multinational tax that raise any money and we're yet to see anything constructive to tackle inequality in the tax system. 

GILBERT: That remains to be seen, You're right that it's very early days and you would expect though that they will come up with something fairly substantial on the tax front. Certainly on the innovation front, they're promising that by Christmas so we won't have to wait too long.

LEIGH: I certainly hope so. And look, if the next election is a battle of ideas as to who's got the better innovation plan then that's a great thing for Australia. Labor has been talking about a start-up year, which is an opportunity for 2,000 university graduates to spend a year looking to start their own firm. Not all of them will make it but what a great set of skills to have as you're leaving university.

GILBERT: Are you encouraged by the fact that a majority of people will support the China Free Trade Agreement, given Labor is now going to get on board? You had some concerns about safeguards and it seemed that the Government were not going to agree to them. You must be encouraged by the fact that a majority of people support the China Free Trade Agreement. Further to that, your colleagues Jim Chalmers and Clare O'Neil have written an interesting piece today about why Labor needs to embrace that agreement. They’re arguing for the benefits and strengths it will bring to the services sector, and of that enormous market to our North.

LEIGH: Well Labor is a free trading party. We have been strong free traders for more than 40 years, since Gough Whitlam cut tariffs and opened up the relationship with China. I think Clare and Jim make a terrific point there about the importance of the services economy and backing the notion that open markets are good for prosperity. But they don't always ensure that prosperity is fairly shared. So if you're a free trader, I think you have to be a social democrat supporting the strong social institutions that makes sure everyone gets a good go. 

GILBERT: It's a huge market. I know traditionally in the last couple of years, through the mining boom, it's always been about resources exports. But if you look at things like clean energy, the Chinese growth has enormous. I think they account for 40 per cent of global growth on renewables and the suggestion in some circles now is that the peak of coal consumption might have been in 2013, when the assumption used to have been that we’d see that half way through next decade. Possibly they've been so effective in embracing renewables and clean energy that we might have already seen the peak of coal consumption in China.

LEIGH: Hopefully, yes. Certainly in my electorate, we’ve got ANU researchers collaborating with Trina Solar in China to build better quality solar panels. You've got a Queensland firm specialising in building sports stadiums in China; you've got a range of law, architecture, and financial firms hungry to get in and work in the Chinese market. Labor's concerns over the Free Trade Agreement were always over the migration provisions, not over the free trading provisions. That's a point that Clare and Jim make clearly today. 

GILBERT: Just to recap a little bit on what we were discussing before: this is the Labor case on Turnbull and the Caymans in the context of the poll. Do you think that backfired on Labor? Given the reaction that has been seen in the Fairfax polls that were done in the days immediately after Labor’s attack on the Prime Minister’s Cayman investments, was that misguided?

LEIGH: Well Labor’s criticism came on the same day that the Coalition, in the Senate, pushed through laws which saw less tax transparency for big firms. It came at a time when Labor is pushing a $7 billion multinational tax package and the Government has a package in Parliament which, according to their own estimates, won't raise any revenue. Our argument there, Kieran, was always a policy one. That was: Australia needs to be working through the G20 and through the OECD, but also working at home to make sure that we've got fairness in the tax system. 

GILBERT: So it's a policy issue, not a smear against Turnbull or an attempt to define Turnbull for those that are still trying to make up their minds about him? 

LEIGH: Absolutely not.

GILBERT: It's just policy in your view?

LEIGH: Well our concern was that tax havens are a problematic part of the global tax network. Our Tax Commissioner has made that point; the OECD has made that point. For the Prime Minister, it is important to be Caesar's wife in all this, to be above any hint of reproach that his own tax affairs are in any way contributing to problematic tax practices.

GILBERT: Is that what he tried to do to avoid the conflicts of interest though? To put them offshore, at arm’s length and pay full tax? He said that he's paid full tax in Australia; capital gains and income tax. Do you honestly think that he's a tax dodger?

LEIGH: Kieran, if the question is: how do I pay the most Australian tax and how do I avoid conflicts of interest, the answer is not going to be that your best option is a Cayman Islands fund. You can get an exchange traded fund on the Australian stock market and that will give you a slice of the Australian market. Or if you don't want any Australian exposure, you can get one that has a slice of the US stock market or a slice of the world stock markets. These are vanilla investments which don't carry any hint of impropriety and which don't give succour to a tax haven.

GILBERT: Right. Just finally, I want to ask you about the Australian Building and Construction Commission as well as the efforts under the Registered Organisations legislation that incorporates unions. It looks like the Government is going to have another effort to try and empower authorities in terms of the unions, particularly after the news of the merger between the CFMEU and the Maritime Union of Australia. As an economist, would you welcome a bit more rigour in monitoring building sites? Because clearly there is an ongoing problem.

LEIGH: If people have any allegations about the law being breached, then they should go to the police. For serious crime, we've got organisations like the Australian Crime Commission. Our view has been that you don't need specialist bodies looking at particular sectors. Regulation should be uniform across the economy. Union membership rates are at the lowest they’ve been for many decades now and one of the impacts of that is that we've seen more inequality. There's a strong link between less union coverage and higher inequality; it's not a coincidence that with the union membership rate so low, inequality is also as high as it has been in three-quarters of a century.

GILBERT: Alright we're out of time unfortunately. Andrew Leigh, thanks so much as always.

LEIGH: Thank you, Kieran.

ENDS

MEDIA CONTACT: JENNIFER RAYNER 0428 214 856


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