PARLIAMENT HOUSE, CANBERRA
WEDNESDAY, 7 SEPTEMBER 2016
SUBJECT/S: Malcolm Turnbull’s failure on multinational tax avoidance at the G20 summit.
ANDREW LEIGH SHADOW ASSISTANT TREASURER: Good morning. My name is Andrew Leigh, the Shadow Assistant Treasurer. The G20 meeting has just wrapped up and again we have a disappointing statement coming out of one of the world's premier economic bodies. Back in 2014 the G20 committed to 2 per cent more growth and we now see Australia with 2.5 percent less growth. So too, the latest communiqué on multinational tax is disappointing. The language simply refers to what's being done elsewhere. It doesn't demand further action from the world's governments on multinational tax avoidance.
One of the challenges for Australia is that unlike any other country at the G20, we are led by a Prime Minister who has a significant share of his own personal investments in tax havens. We know that Malcolm Turnbull was a director of a British Virgin Islands based firm which was named in the Mossack Fonseca papers. We know that he has chosen to invest in the Cayman Islands, a jurisdiction which has been classified as a tax haven by the Tax Commissioner.
Now why do tax havens matter? Well they matter because the very existence of tax havens makes it harder for us as a country to make sure that firms pay their fair share. The existence of tax havens is the reason that firms work so hard in order to try and move profits offshore. We need to shut down tax havens, but we can't do that when we're led by somebody who is himself a significant investor in tax havens. Malcolm Turnbull should divest from tax havens so Australia can take a stronger stance on tax havens.
We need stronger domestic laws. Every time Labor stands up calling for loopholes to be closed, we have Malcolm Turnbull saying that those loopholes are defensible. Saying for example, that Labor's proposals to reduce debt shifting by multinational firms are going to be a risk to the economy. Frankly the only thing that's a risk to our tax base is a Government which is always on the side of the multinationals rather than middle-class Australians.
We need to take stronger action on multinational tax avoidance through a register of beneficial ownership, through improved transparency laws that bring down the disclosure threshold to $100 million and through closing the debt-shifting loophole that Labor has been talking about over recent years.
Labor is committed to tackling multinational tax avoidance because we see it as an issue of tax justice. When multinationals don't pay their fair share, then regular Australians have to pay more. We want to make sure that we have fairness in our tax system which is why Labor has been leading this debate over multinational tax avoidance. Happy to take questions.
JOURNALIST: You complain about the G20 not coming up with anything but what can Australia do on its own? I mean we might think that we are the centre of the universe but in the big scheme of things we're just a moderate player in the world. How can Australia change the whole mood of the world?
LEIGH: That's a great question and there's two elements to it. One is that we need to improve our domestic laws. We need to close that debt-shifting loophole and thereby add billions of dollars to the budget bottom line over the forward estimates. We need to introduce a register of beneficial ownership so we've got more transparency. And we need to improve transparency for private firms. As a result of the dodgy deal done last year, by the Liberals and the Greens, two-thirds of the big private firms were taken out of the tax transparency net. Labor believes we need to put them back in.
But then to the other part of the question – what do we do globally? We need to be part of the solution, rather than part of the problem. We need to be engaging with other countries about how to close down tax havens. We need to be making sure that we're at the forefront of the conversation in the G20. But when we look at the pace of change across the G20, Australia is far too often a laggard, rather than a leader on multinational tax avoidance. We have to be doing more, because if we don't, the multinationals don't pay their fair share and regular Australians end up having to pay more tax or get fewer services.
JOURNALIST: Can I ask you about the register of foreign interests? We've got the report that was just released today. But we're hearing different sorts of takes on it from the Treasurer and the Acting Prime Minister. So Mr Morrison is emphasising the lower level of foreign investment, saying 85 per cent is still Australian-owned, whereas we've got Barnaby Joyce saying it's "substantial" and "twice the size of Victoria". What is your take on that? Are there problems within the Coalition do you think?
LEIGH: It's an open secret that there's problems within the Coalition on economic policy. With the ‘effects test’ you've clearly got the National Party tail wagging the Coalition dog.
Labor believes that, on balance, foreign investment has been a huge benefit to Australia. If you look, for example, at the South Australian economy, the biggest damage that's being done is through the withdrawal of foreign investment. We need a Foreign Investment Review Board. We need full and transparent information on land-holdings. The Government had promised to follow Labor's lead of full disclosure – effectively a website where it was possible to check whether a particular parcel was foreign-owned, and if so, who by. But they've welched on that, releasing today a register which provides much less information to Australians.
The reason I'm so passionate about getting information out there is because we can only continue to make the case for economic openness if we have full information. If you have only partial information being released - which is what we're seeing today - then the forces of xenophobia can run their scare campaigns. Australia should be able to say "no" to foreign investment, but on balance, foreign investment in agriculture has meant more jobs and better paid jobs in regional Australia.
JOURNALIST: The Grattan Institute earlier this week warned against non-bipartisan support on superannuation reforms saying if we can't get that through, there's no hope for any other passing of legislation. So, are you concerned about this can be like a litmus-test for other pieces of legislation?
LEIGH: We had the Coalition dragged kicking and screaming on the issue of superannuation reform. You remember when Labor first announced our carefully calibrated policies last year, Scott Morrison was trampling journalists in his wake to get to a microphone to talk about how awful it would be if we curtailed superannuation tax breaks at the top end. Now the Coalition's finally come to the party on superannuation but they've done so in a way which is still retrospective. Today we've got the extraordinary spectacle of Scott Morrison releasing draft legislation on his retrospective superannuation reforms without the retrospective bit. My colleague Katy Gallagher will be standing up before you later today to go into more detail on that.
JOURNALIST: We've got the national accounts coming out over the next hour, have you got any views on that? They're expecting growth to confirm that we've expanded the 25 consecutive years which is obviously a good thing. But economists are expecting a slow-down in the GDP. Is that a concern?
LEIGH: The number I tend to look at in the national accounts isn't the headline GDP figure because that's not adjusted for our terms of trade or for our population. It's real net national disposable income per capita, this is what most economists regard as the benchmark for living standards. Last time I checked that measure, living standards were about four per cent lower than when the Coalition won office. Meaning that many Australians are worse off than they were when Labor was last in office. So making sure that we do better on growth really matters.
I talked before too about the G20 target. Let's not let the Coalition of the hook. In 2014 they said there would be 2 per cent more growth than was in the forecasts. When you compare growth rates with the 2014 forecasts, we actually see 2.5 per cent less growth and Australia tracking further and further behind that target. So on the GDP target the Coalition set for Australia, they're failing fast.
No other questions? Thanks everyone.