International tax has been in the news again with allegations a major bank has been helping wealthy individuals dodge their tax obligations. I joined Stuart Bocking to talk about what we can do to prevent this; here's the transcript:
TUESDAY, 10 FEBRUARY 2015
SUBJECT/S: HSBC banking leaks; multinational profit shifting; Tony Abbott’s cuts to pensions; 2015 budget
STUART BOCKING: There's been interesting reports today about HSBC's international banking arm, which detail a whole heap of secret accounts which have been operated by all sorts of people including A-listers like Christian Slater, Joan Collins, Phil Collins, and the motorcycle ace Valentino Rossi. A number of high-profile Australians have been caught up in this as well, including Elle McPherson and also the late Kerry Packer. Now, there's no suggestion that any of them have broken the law, but the Australian tax Office is now probing the Swiss bank accounts of 261 Australians as new details emerge of what is the biggest leak in banking history. Dr Andrew Leigh is the Shadow Assistant Treasurer and he's on the line. Dr Leigh, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Stuart, how are you?
BOCKING: I'm well. It isn't illegal to have an offshore bank account, is it?
LEIGH: No, that's right. It's just illegal not to notify the Australian tax office.
BOCKING: So this is quite extraordinary because they're saying there's potentially an additional $30 million which is owed to the nation's coffers.
LEIGH: That's right. Certainly this new Common Reporting Standard which developed countries around the world have agreed to implement is going to make it much harder for firms and individuals to hide information, as seems to have happened in this case. But what has concerned me is that the Abbott Government is implementing that Common Reporting Standard a year later than most other advanced countries, meaning there's an extra year that people are able to exploit loopholes like this.
BOCKING: Right, because the ATO received a disk containing some of this data in 2010?
LEIGH: That's right. At the moment the ATO is, for some of these things, having to rely on leaks. That's not the way it should be. What we should have is proper information exchange and that's what the Common Reporting Standard does. The thing is that we're a late adopter, where we should be an early adopter. That means that ultimately, we're hurting our tax base. It always seems strange to me that the Abbott Government says there's a budget crisis and that's why they justify cutting the pension and cutting the wages of the cleaners who clean their offices, but at the same time, they're pretty weak when it comes to taking on the strong. When it comes to dealing with multinationals and people with money in these offshore banking accounts…
BOCKING: Just on that, we keep hearing it – Chris Bowen said last week – that the government is cutting the pension. The pension isn't actually being cut, is it?
LEIGH: What's happened is that the pension will be indexed with prices rather than wages.
BOCKING: But it will still rise though, won't it?
LEIGH: It won't move with the living standards of the general community.
BOCKING: Ok, but sometimes the CPI is running faster than some of the other measures. But it's not being cut. I mean we keep hearing this and I let Chris Bowen get away with this last week. We've got to be a bit fair because it does spook people, but the pension isn't being cut. It might not rise as fast as it has previously, but it'll still rise.
LEIGH: Stuart, before the Abbott Government came to power, pensions went up with wages or prices, whichever was the greater. And now the Abbott Government has indexed it only to prices, which basically decouples pensions from the productivity increases of the general community. That's a big call to be making. You'd think that if Tony Abbott was going to say pensioners shouldn't share in any increases in community living standards and they shouldn't have any portion of the productivity rises in Australia but should only move with prices, you'd think he'd take that to an election. Because he didn't, many Australian pensions are rightly outraged by that broken promise.
BOCKING: Yes, but the PM has said they'll get to vote on that and it won't be implemented until after the next election.
LEIGH: Well Tony Abbott has said that he's going to do it. He doesn't seem to be for turning on that, just as he's not for turning on a host of other measures that are hurting Australians.
BOCKING: But he has said, in fairness, he'll do that. Look, I've been as critical as anybody on the broken promises, but he has said that change won't occur until after the next election. So if pensioners are aggrieved, they do get a chance to vote against it at the next federal election, don't they?
LEIGH: And I would certainly urge them to do so. There's an opportunity that Australians have to send a clear signal to Tony Abbott that his unfair budget is out of step not just with Labor values, but with fundamental Australian values which say that if we need to take steps towards budget repair then we shouldn't at the same time be giving billions back to multi-billion dollar firms. These companies need a tax break like – well, like Prince Philip needs a knighthood.
BOCKING: Well they all want the money back, that's for sure. Tell me this, in light of what's unfolded yesterday, do you think we can almost now assume that the so-called budget repair job is in the too-hard basket, given how much political skin Tony Abbott and Joe Hockey have lost. Can you see this being a far more benevolent budget, given the first one is still in ruins?
LEIGH: I'd certainly hope that the Abbott Government takes the lessons of the community, that their first budget didn't just break promises, but broke fundamentally the Aussie social contract. They need to take the GP tax off the drawing board, and they need to be clear that improving the number of Australians with a tertiary education is a core answer to boosting Australia's productivity in an age with runaway globalisation and technology. We don't want to be deterring our Australians from going to university; we want to be encouraging it. That's just what the last budget didn't do. So I hope we do get a better budget next time around – Australia needs it. We also need a government that's not just going to talk about the deficit, but is actually going to act to reduce it. Rather than increase it as they've done with these multi-billion dollar giveaways to these big multinationals.
BOCKING: Well that is going to be one of the challenges as they formulate this next budget with an eye to the polls and the dramas within the party. I appreciate your time this morning.
LEIGH: Thank you, Stuart.