Over the past few days, there's been a lot of discussion about how much tax Australian companies pay and whether big firms are paying their fair share. This video from United Voice and the Tax Justice Network gives a great rundown of the facts and figures behind that debate:
Multinational tax avoidance continues to be a hot topic of discussion across Australia, and this morning I joined John Stanley and Garry Linell on 2UE Mornings to talk about how we can tackle this challenge. Here's the transcript:
WEDNESDAY, 1 OCTOBER 2014
SUBJECT/S: Joe Hockey dragging his feet on multinational profit-shifting; New Senate inquiry
JOHN STANLEY: This is the question that we have been talking about for quite some time. This question of tax and the capacity of the Australian government to get some of these companies, particularly these big companies like Apple and Google to pay their tax.
GARRY LINELL: So we’ve got the big G2O meeting in Brisbane coming up later this year and the Abbott Government has pledged to tackle the issue there. But there are now even more concerns that the Australian tax office is ill equipped to deal with the problems. I mean if you look at the money that’s going missing, it could actually solve all of our budget deficits. Now they are currently in the process of axing about three thousand jobs at the Australian tax office, including most of the international tax experts. Now many of these experts are being poached to work for the big four accounting firms.
STANLEY: Can we just get this straight. We’ve got people, thousands of them who have been trained at public expense in our universities, they’ve gone into the public service, they’ve become tax experts, they work in the tax office, they’re laid off and then they go and work for the big companies that are helping these big international firms avoid their tax.
LINELL: But the best ones are being poached anyway, long before they are being laid off. They are being picked up by both the major companies who want to know how to minimise their tax and the big accounting firms.
STANLEY: Dr Andrew Leigh is the shadow assistant treasurer and he is one the line with us now.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Morning John, morning Gary.
The Tax Justice Network and United Voice has just released new research showing many companies in the ASX 200 have an effective tax rate well below the Australian standard. I joined Jonathan Green on Radio National's Drive program to talk about how we can ensure that companies pay their fair share of tax. Here's the transcript:
RADIO NATIONAL DRIVE
MONDAY, 29 SEPTEMBER 2014
SUBJECT/S: multinational profit shifting; corporate tax avoidance
JONATHAN GREEN: This may not come as a shock, but it seems that some of our biggest companies are paying the least amount of tax. The latest evidence comes in a report from the Tax Justice Network, and it’s a report supported by the United Voice union. Dr Andrew Leigh is the Shadow Assistant Treasurer and he joins me now, Dr Leigh – welcome.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks Jonathan.
GREEN: We all know that businesses try to minimise their tax, but this survey suggests that one third of top Australian companies pay less than 10 per cent. Is that extent a surprise?
LEIGH: Certainly there is a challenge with what's known as multinational profit shifting which a lot of developed countries are facing at the moment. It arises because increasingly a lot of production is being globalised and we're increasingly becoming a service economy. So it's easier for accountants to move the nominal country in which production takes place around to a low tax jurisdiction. A lot of countries are now working out how they can crack down on multinational profit shifting.
GREEN: So do we have particular vulnerabilities?
LEIGH: Australia – as a small, open economy – is particularly vulnerable to this. One of the things that Labor did last year, in our final year in office, was for Wayne Swan and David Bradbury to sit down and put together a multi-billion dollar package of measures to crack down on multinational profit shifting. What was disappointing to me was that when the Coalition came to office, they didn't say 'well, what's the next thing we can do beyond this?' Instead, they began to wind it back. So they shrunk the size of that package by $1 billion, effectively losing $1 billion of revenue which went back to multinationals in the form of extra tax breaks.
With the release of a new report from the Tax Justice Network showing that some companies in the ASX200 have an effective tax rate of 10 per cent or less, I joined Sky's AM Agenda to talk about what we can do to tackle multinational tax avoidance. Here's the clip:
This week I was fortunate enough to be invited to speak at the OECD-NBER Conference on Productivity Growth and Innovation in the Long Run in Paris. My theme was the relationship between inequality and social mobility; here's the details.
DOES TOO MUCH INEQUALITY PREVENT SOCIAL MOBILITY?
FRIDAY, 26 SEPTEMBER 2014
For much of the time we’ve been on the planet, humans have led a static existence. We lived where our parents lived. We did the jobs our parents did. The chances of moving up or down the ladder were limited.
Indeed, that era was so recent that most of us still carry the mark of it. Most Anglo-Saxon surnames denote occupations (Smith, Archer, Miller) or places (Marsh, Hill, Lake), reflecting a time when few left their village or rose above their station.
There’s nothing wrong with living in the same town as your parents, or following them into the same career. But for many of our forebears, this wasn’t a choice: it was a necessity. As recently as a few centuries ago, virtually everyone on the planet was consigned to a caste system.
The lack of mobility wasn’t just unfair – it was extraordinarily inefficient. Imagine how many talented youngsters from poor backgrounds lived and died without a chance to use their skills. How many potential Mozarts were lost because they never got to hold an instrument? How many would-be Darwins were denied a decent schooling? How many budding Bill Gateses languished because they couldn’t get financial backing for their entrepreneurial idea?
Curtin University has just released the most comprehensive study of the Australian not-for-profit sector ever. The research tells us plenty that is useful about how the sector works. But if Kevin Andrews gets his way in scrapping the Australian Charities and Not-for-profits Commission, we'll lose that opportunity again.
CHARITIES COMMISSION REVEALS MORE ABOUT NOT-FOR-PROFITS THAN EVER BEFORE
Thanks to the creation of the Australian Charities and Not-for-profits Commission, we now know that the charity sector generates income of around $100 billion a year and employs over 900,000 Australians.
These findings are detailed in the first comprehensive report on what makes Australian charities tick, released today by Curtin University.
The report was made possible because in 2013 the charities commission began collecting Annual Information Statements from every registered not-for-profit detailing their finances and operations.
I'm looking for a full-time electorate officer to join my team, working out of my electorate office in Braddon. The job entails lots of community engagement and solving local problems. In a typical day, you might be helping someone at the front counter with a Centrelink issue, assisting with a 2000-letter mailout, or arranging a community forum at the local football club.
Fraser is not only the most populous electorate in Australia (with around 140,000 electors), but also one of the most engaged. One of the great things about Fraser is that people are keen to write in about issues big and small, from climate change to the local postbox. But it means that I need hardworking electorate staff to manage it all.
The electorate team consists of 4 full-timers, plus a bevy of part-timers, volunteers and interns. There's a good sense of camaraderie, and it's a great way to help the community.
If you're interested in grassroots politics, community organising and love Canberra, this job is likely to be a good fit. It won't involve policymaking or speechwriting, but a lot of writing, problem-solving, and digital engagement.
The current incumbent is Damien Hickman, who is off to do great things with the National Rural Health Alliance. If you have queries about the job, you can call him on 6247 4396.
The salary range is $48,017 to $64,532 (EO-A in the parliamentary jargon).
Applications close Sunday 28 September. If you're interested, please send a covering letter, a CV and a writing sample (100-800 words) to firstname.lastname@example.org.
The OECD has released an important report on action to tackle multinational profit shifting and tax avoidance. It's a welcome step forward, but now we need the Treasurer to step up and get its recommendations delivered both in Australia and around the world.
OECD TAX PLAN MEANS CRUNCH TIME FOR HOCKEY
With the release overnight of a pioneering report on tackling multinational tax avoidance, it is time for Treasurer Joe Hockey to stop talking big and start taking real action.
The report outlines the first set of concrete multilateral initiatives to block base erosion and profit shifting. It has been prepared by the Organisation for Economic Co-operation and Development in consultation with representatives of more than 110 tax jurisdictions globally.
The release of these initiatives comes ahead of the G20 Finance Ministers meeting this weekend in Cairns. At that meeting Joe Hockey will have a much-needed opportunity to show he can deliver more than rhetoric when it comes to making major companies pay their fair share of tax.
To date, the Coalition’s only real actions on this have been to walk away from closing $1.1 billion in tax loopholes, and to stall on signing Australia up to new bank transparency measures.
Today I've got an opinion piece in The Australian, supporting Chris Bowen's call for the independent Parliamentary Budget Office to be tasked with preparing budget forecasts and figures.
The Coalition has already shown a worrying tendency to cook the nation's books, so it's time that power was taken out of the hands of governments altogether.
Treasurer Joe Hockey trashes economic forecasts, The Australian, 16 September
THEY called it “political monetary policy” — the tendency for interest rates to be cut in election years, fuelling a bubble that then had to be contained. In a series of important research papers in the late 1980s and early 90s, Harvard’s Alberto Alesina and co-authors showed that allowing politicians to set interest rates was causing a political business cycle.
Research such as this has underpinned the move across the developed world — including in Australia — to have interest rates set by independent central banks rather than by politicians.
Alesina argues that having an independent agency set interest rates and keep an eye on inflation brings two important benefits. First, independent central banks are less sensitive to sudden and short-term political pressures than elected governments. As a result, they tend to behave far more predictably — something that promotes economic stability. In particular, central banks have no incentive to manipulate monetary policy in the run-up to an election. They also don’t alter policy dramatically in the way that often happens after a change of government.
With news that Australian troops are headed back into Iraq, I joined Chris Hammer and Andrew Laming on Breaking Politics to talk about the humanitarian importance of their mission. Here's the transcript:
FAIRFAX BREAKING POLITICS
MONDAY, 15 SEPTEMBER 2014
SUBJECT/S: Australian military involvement in Iraq; Joe Hockey dragging his feet on multinational tax avoidance; Indigenous affairs
CHRIS HAMMER: Prime Minister Tony Abbott has announced that some 600 Australian military personnel will be deployed to the Middle East as part of a coalition combating ISIL in Iraq and Syria. Joining me to discuss that and other issues is Andrew Leigh, the Labor member for Fraser here in the ACT and also the Shadow Assistant Treasurer. And from Brisbane, Andrew Laming, the Liberal MP. Andrew Laming, where are you?
ANDREW LAMING, MEMBER FOR BOWMAN: I'm in the black swamp, the home of the famous flying foxes up here in Southeast Queensland so hopefully I won't be dodging any guano by flying foxes this morning.
HAMMER: Ok, Andrew Laming to you first: Australia is deploying troops to the Middle East, what do you understand their mission is and what do you understand the timetable is?
LAMING: Well it's very clear to everyone that ISIL is an emerging threat and that standing by and doing nothing will only guarantee the further movement of this group. I think Tony Abbott is absolutely right to commit Australia to this coalition; there is a reason for joining this coalition. We have high-level partners supporting us and finally there really are no voices proposing that we do anything else. I mean to sit by and allow what we're seeing in Northern Iraq to continue, we simply cannot contemplate that.