THE HON. BILL SHORTEN
LEADER OF THE OPPOSITION
MEMBER FOR MARIBYRNONG
CHRIS BOWEN MP
MEMBER FOR MCMAHON
ANDREW LEIGH MP
SHADOW ASSISTANT TREASURER
SHADOW MINISTER FOR COMPETITION
MEMBER FOR FRASER
BIG MULTINATIONALS TO PAY FAIR SHARE UNDER LABOR
MONDAY, 02 MARCH 2015
SUBJECT/S: Multinationals to pay fair share under Labor; Liberal Party’s Unfair Budget; Foreign investment changes; Intergenerational Report; Human Rights Commission; Iraq; Polls
BILL SHORTEN, LEADER OF THE OPPOSITION: Good afternoon everybody, I'm here this afternoon with our Shadow Treasurer and Shadow Assistant Treasurer to announce Labor's plan for a level playing field for multinational companies to ensure that they pay their fair share of taxation, just like everyone else has to. The following are the principles which underpin our announcement. How can we ask Australians to work hard and pay tax if the rules aren't fair for multinationals too? How can Australian businesses compete if they pay more tax in Australia than big multinationals?
In the last Budget the Liberal Nationals handed back more than $1 billion to big multinationals, but cut the pensions at the same time. In the last Budget they reopened the door for big multinationals to avoid paying tax in this country, but they put a tax on going to see the doctor. Under the Liberals, some large multinationals pay less, while young Australians will pay more for their university degrees. Last year, one of the world's largest companies paid only $80 million in Australian tax on local revenue of just over $6 billion; this isn't good enough. I believe everyone works hard in this country, seeks to grow their businesses creating national wealth for all. That means all of us have an obligation to pay our fair share of taxation. Our tax system shouldn't get softer the higher it goes. How much tax you pay shouldn't depend upon how much you can afford to pay your tax lawyer and specialist accountants.
Why should James Hardie get a tax advantage over James the plumber? Labor's priority will be to shut down loopholes that allow some large multinationals to send profits overseas and avoid paying their taxes here. Debt shifting and base erosion are a significant challenge. Now Labor has been talking to experts, tax reformers, we've been speaking to multinational tax practitioners. Our plan is costed by the independent Parliamentary Budget Office and looks to deliver nearly $2 billion to the bottom line. Our approach includes levelling the playing field to stop large multinationals from double dipping their exemptions and deductions, including new limits on the amount of debt that companies can claim tax deductions against. Extra resources should be provided to the ATO to chase down companies not paying their fair share. Now, no one is saying that this will be easy, it is a complex and difficult task. All the more reason why we now need to start acting decisively as a nation to make sure that everyone pays their fair shares, including large multinationals. We do not intend to squib it like the current Liberal National Government. This is our plan, we will be consulting widely about our implementation details, I now might ask my Shadow Treasurer and then Shadow Assistant Treasurer to supplement this, Chris.
CHRIS BOWEN, SHADOW TREASURER: Thanks very much, Bill. Well this is a substantial announcement being made by the Labor Party today, it’s a dividend of our policy development process. Last year we convened a round table of experts on multinational tax evasion. We've been consulting with experts in the private sector, in academia and former government officials. These are four well-calibrated, well-considered, discreet but related substantial measures. I make the point about the amount of money involved here, the Government's ill-fated and soon to be eliminated GP Tax is estimated to raise $800 million. The measures that we are talking about today raise almost $2 billion. As Bill said, this is a matter of fundamental fairness for Australian businesses. Those businesses who can't afford or aren't able to engage in complex international debt shifting deserve a fair go. Small, medium or large we need a level playing field for Australian businesses.
It's not fair for ordinary Australian taxpayers whether they be individuals or businesses to see this sort of money shifting going on to reduce and eliminate tax debt in Australia. It's a matter of fundamental fairness and we say this to the Government: if the Government chooses to take up this option in the Budget regardless of whichever member of the Government delivers the Budget, if they choose to take this option up, they will do so with our bipartisan support. We've always been prepared to back fair measures that support Budget repair and today, we are setting the agenda in doing so. If they don't, then this announcement today sets a blueprint for Labor's approach in office. This is the opening salvo in the battle of ideas which Bill foreshadowed last year. A result in a dividend of Labor's consultation, thought process, policy development process which we're outlining to you today for well-considered ideas, properly consulted upon, will continue to consult with the business community and experts about implementation, but the announcements we're making today are substantial and a very significant step forward in fairness in the tax system, an area in which the Government has been asleep at the wheel. They've been strong on rhetoric, but weak on action. Today the Labor Party is providing the action and the detail which has been lacking from the Government. Over to Andrew.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thank you Bill. Thank you Chris. Over recent years the debate over multinational tax fairness has been broiling the front pages and back bars of Australia. Australians know the accounts of large multinational firms that don't appear to be paying their fair share of tax and yet at a time when so many Australians recognise the importance of this debate, Australia has a Government that's given a billion dollars back to some of the world's largest firms. Firms that need a tax handout like, well, like Prince Philip needs a Knighthood.
And at the same time, as the Government is giving money back to multinationals they're cutting the wages of the cleaners who clean their own offices. Labor believes that's not good enough. We've been working carefully, engaging through papers coming out of the OECD through the G20 process, on a series of measures that are entirely consistent with our international tax treaties. A series of measures that are modest and well calibrated and which aim to address the issue of debt shifting which so many experts acknowledge is one of the chief ways in which multinationals manage to avoid tax. The measures focussed on hybrid mismatches focus on a particular instrument that multinationals appear to be using to reduce their tax bill by effectively double dipping across countries. The measures on data matching ensure that Australia is better able to get the information it needs to enforce our tax laws. And by putting additional resources into the Australian Taxation Office, we're able to raise revenue through more careful audits. This comes on a day whereas has been reported the ATO has recovered around a billion dollars thanks to a Labor program put in place to see multinationals pay their fair share. Hand over to Bill to take questions.
JOURNALIST: The lion's share of the saving comes from your changes to thin capitalisation. Could you explain how they differ from the policy you took on thin cap to the last election on which the Coalition says Treasury told it was un-implementable?
BOWEN: Well what we are doing here is removing two of the three possible approaches, it is quite different to what we proposed in Government. What we proposed in Government was right for the times, but we have obviously now dealing with a different set of circumstances, what we're doing is removing two of the three possible ways of determining gearing levels to adopt what we think is best practice. If the Government doesn't understand that this is different to what we announced in Government, what we announced in Government was appropriate for the time, but of course in Opposition you renew, you update and this is a new way of achieving a very similar objective.
JOURNALIST: How have the times changed?
BOWEN: Well what we've done is we’ve consulted with academia, we’ve consulted with private sector, about the best way of achieving the same objectives. That's what we've done, adjusted to new advice, international best practice, engaged with OECD best practice guidelines and of course our former Assistant Treasurer is working with the OECD, he's been chosen as one of the world's foremost experts on minimising tax evasion, we've looked at the OECD work, consulted widely and we’ve come up with a new and very effective way of achieving a very similar objective.
JOURNALIST: This measure that you've announced if you treat for example the United States company different to say an Australian company, wouldn't that breach the US FTA? I mean are you confident, have you got advice that this doesn't breach our free trade agreements?
LEIGH: We are confident. This is a measure which is carefully calibrated, indeed, quite unlike Joe Hockey's thought bubble of a Google tax which could potentially have serious ramifications for our tax treaties. The worldwide gearing ratio approach flows out of an OECD discussion paper published late last year and it ensures that companies are able to deduct a reasonable amount of debt with that amount of debt calibrated by the amount of debt that they owe to third parties as a multinational group. It's a fair approach, and it’s an approach which is consistent with Australia's international obligations.
JOURNALIST: Does the United States Government actually support that?
SHORTEN: We are confident that what we're proposing is that in Australia people should pay their fair share in terms of taxation. We are confident that many Australians are frustrated when they see certain large companies paying a tiny amount of tax compared to their revenue. And we are confident that in light of, going back to something that Laura was asking earlier- the world, the OECD, the G20, have certainly targeted these issues in recent times and we are confident that what we will help deliver is nearly $2 billion to the bottom line. We're also confident that when it comes to priorities, I would rather go down this path than making sick people pay more to go and see the doctor.
BOWEN: And just on your point, further to your point, you are right to raise the concern about international treaties. The policy that we are announcing today does comply, unlike the thought bubble with no detail we saw from the Treasurer last year where he said, "let's do a Google tax." We looked at that, we considered it, we weighed it up. We rejected it based on our concerns- about very similar to the ones that you raise, it's the Treasurer who risks breaching international treaties with his ill-considered thought bubble, the opposite of the approach we've taken in our- based on feedback from our extensive consultations.
JOURNALIST: If multinationals are asked to spend nearly $2 billion more tax, pay nearly $2 billion more tax in Australia, is that going to affect some investment decisions?
SHORTEN: Well I think your question at least assumes that perhaps there is a problem in the taxation system and some companies aren’t. But I think it goes to fundamentally the quest of international competitiveness. How can we be competitive when certain companies are gaming legal tax loopholes in Australia? How do we get up every morning and ask people to work hard in their small businesses in the High Street of Australia, who pay their taxes and then other corporations, we say to them "don't worry, because we are not interested and it's not our priority, that we will leave alone multinationals." It isn't right that James Hardie pays less than James the plumber, James the greengrocer or indeed any of the small or medium sized businesses in Australia. And by the way if we want to be internationally competitive, perhaps the Government should stop contemplating just arbitrarily changing foreign investment rules. Maybe what we need to do is stop undermining the opportunity for people leaving school to go to university, because skilled workforce is the basis of international competition. Maybe what we should do is have infrastructure in Australia decisions based upon the independence of Infrastructure Australia rather than political stitch-ups which are so beloved of this Government.
JOURNALIST: Mr Shorten you talked a bit about bipartisanship which seems to be the flavour of the month these days, you're offering bipartisan support on this deal. Scott Morrison's talked about trying to get bipartisan support on child care changes, and he's also talked about wanting some changes from you to trade off on welfare measures. What progress have we got on this and how prepared is Labor to actually negotiate with the Government on these matters?
SHORTEN: Our bona fides have been there for all to see. We've supported a range of Budget measures since the last Budget which we thought weren’t completely unfair to the Australian people, point one. Point two, we're putting forward here propositions around tackling multinational legal loopholes to help the bottom line of the Budget. When it comes, though, to bipartisanship in terms of some of the matters you've raised from Scott Morrison, what we also say though is we do have some bottom lines. We don't support cuts of $6,000 to family payments for families on modest incomes. We do not support the GP Tax, it's not clear if the Government still support it, they're sending out a range of confusing signals here. But when it comes to fairness what we won't support is the Government breaking its promises and hurting ordinary Australians. But we have been bipartisan on a range of matters and we continue to do so.
JOURNALIST: Mr Bowen if this is the first salvo in the battle of ideas, you've also talked about the need to consider the fairness of superannuation tax concessions. What do you make of the Green's proposal for a progressive tax regime on superannuation?
BOWEN: Well we'll have our own policy development process. We won't allow the Greens, they're entitled to have theirs, they won’t be determining our policy development process. We said very clearly that equity in superannuation tax treatment is something that needs to be considered in the national debate and discussion about budgetary pressures. We've put that on the table, we'll have more to say in due course but it will be our policies, not ones suggested by other political parties.
JOURNALIST: Wouldn’t it be more equitable have a progressive tax cut?
BOWEN: Look, the situation is that I've said very clearly and deliberately that we need a tax treatment of superannuation which is equitable and fair and we had modest measures in place which the Government has reversed. Obviously as we go through our policy development process we'll have more to say but it will be policies which we determine, just as we have this one, based after consultation, with the sector, with experts, a calm and deliberative process which we'll be conducting and we will have more to say in due course.
JOURNALIST: What about the foreign investment changes or option paper that was announced last week on real estate. Where does Labor stand on that?
BOWEN: Well we'd like to see a bit better detail than we’ve seen so far. I saw the Assistant Treasurer flailing all over the place on Sunday trying to explain basic principles like whether it applies to bids or whether it applies to formal offers and he didn't have any answers. In fairness to him, you know, the policy has been put together on the run by clearly people other than himself. And what's clear here is that we see the Liberal Party internal dynamics playing out. We've seen two foreign investment announcements made in relation to real estate, one agricultural and one residential in the aftermath of a leadership challenge and the leader of Liberal Party, the Prime Minister saying "I'm doing this because my backbench has asked me for it". Now we've said that we are open minded about a modest fee, which was previously been engaged upon in terms of discussion, but there are a whole lot of questions to be answered, this is clearly policy on the run from the Government. Policy on the run is a generous term. It's not even policy. These are thought bubbles on the run, basic questions aren’t answered, and what we're seeing is internal Liberal Party dysfunction playing out in a way which does affect international confidence in the rules around foreign investment in Australia.
JOURNALIST: This Thursday’s Intergenerational Report is going to have, as I understand , several trajectories, one of which is going to be the debt and deficit picture over 40 years based on the settings when you were last in Government, you’re budgetary settings and stuff. Do you feel - how do you feel about that with regard to the Charter of Budget Honesty and do you think it should be now redone and take into account what you've announced today?
BOWEN: Well what a trashing of the Charter of Budget Honesty we're seeing from this Treasurer, an absolute trashing. We've seen the Treasurer breach the law of Australia by not releasing the Intergenerational Report yet. That is an outrage. We all have to comply with the law. If the previous Labor Government had tried this on, Mr Hockey would have got himself into full chest beating mode, and going around the country alleging all sorts of scandals and he just lets the law of the land be breached, on his watch, by himself, and he thinks that’s just okay. That's breach of the Charter of Budget Honesty number one. Secondly we see the Treasurer engaging in a taxpayer funded advertising campaign so that he can achieve what he's been incapable of achieving for the last almost, 10 months of getting community support for his unfair Budget. And three, we now see that the Intergenerational report is going to include a chapter on the Labor Party. I mean news flash Joe Hockey, you are now Treasurer, you are not in Opposition anymore. This is an important document. It should be an important document which informs public debate. That's the way Peter Costello intended it, that’s the way Wayne Swan did it. Joe Hockey has not seen one part of the Charter of Budget Honesty that he won't trash. And we will call it out where we see it. The Intergenerational Report should be a bipartisan document which informs public debate, not a cheap political prop for Joe Hockey, and if that's what he intends to do then he will be called out for it. I've announced that under a Labor government the Charter of Budget Bonesty Act would be amended so that the Intergenerational Report would be conducted at arm's length from the Government by the Parliamentary Budget Office as a proper contribution to public debate, it would not be used as a political play thing as this Treasurer appears addicted to doing.
JOURNALIST: Mr Bowen when you were Immigration Minister were there any discussions with Gillian Triggs about a children in detention report?
BOWEN: Gillian Triggs and her predecessor Catherine Branson would engage with me as Immigration Minister. I'll remind you Sid that the Human Rights Commission appeared in the High Court of Australia and asked for Government legislation to be struck down, and was successful in that argument. We did not engage in a witch hunt against the Human Rights Commission. We respected their independent role. They have a role to play which means sometimes, perhaps even often, disagreeing with the government of the day. The difference is when we disagreed with the Human Rights Commission, we respected them. We respected the role of the President of the Human Rights Commission, to take it up to the government of the day, as is mandated by their charter and by their legislation. Now, the Human Rights Commission would regularly - publicly and privately raise concerns about children in detention. I would draw to your attention the fact that Gillian Triggs has pointed out that we were getting children through detention a lot more quickly than the Government and the Government's deliberate policy decision, deliberate policy decision to leave children in detention indefinitely was what led to the inquiry that they then embarked upon, and the Government of the day like it or not should respect the independence of the President of the Human Rights Commission.
JOURNALIST: So there was no need for an inquiry because you were moving the children-
BOWEN: Well that's a matter for the Commission. What the Commission enquires into is entirely up to them. Let me be very clear, the Commission never asked for my agreement to an inquiry, nor would they nor should they, because it is entirely a matter for them, and that would have been the answer I would have given me if they’d asked.
JOURNALIST: Had they threatened you with an inquiry?
BOWEN: Of course not.
JOURNALIST: Mr Shorten have you had any briefing on Iraq on the possibility of sending more troops?
SHORTEN: I had a brief informal conversation at the very beginning of January, but no, we haven't had any formal briefings about what's being proposed with Iraq.
JOURNALIST: Mr Shorten why do you think the polls have tightened in the last week?
SHORTEN: Well I think that the numbers that matter here are not the polls. The numbers that matter here is still unemployment is rising, there's still a GP Tax- and can someone in the Government please tell Australia what's happening with that GP Tax? And then you've got pension cuts, and what we've done today, and I know people perhaps want to move off it, but what we've done here today, is in the first half of our parliamentary term we've got an independent Parliamentary Budget Office costed policy which we're putting forward, and what I think that Australians want is more debate about the ideas and less about the personalities. And what I think they want out of the Liberal-National Government is can they work out who's in charge and can they please tell the rest of us, because in the meantime, the rest of Australia wants to get on with life. Thanks everyone.