Tax havens being used to detriment of Australian taxpayers - Transcript, Richo

E&EO TRANSCRIPT
TELEVISION INTERVIEW
RICHO, SKY NEWS
WEDNESDAY, 1 MAY 2019

SUBJECTS: Eastern Australian Irrigation, Clive Palmer, Facebook and Google tax bills, Adani, the Liberals’ literal decimation of public service jobs.

GRAHAM RICHARDSON: Our next guest is Andrew Leigh and he's in one of my favourite places, Townsville, or he's been there I think today. Welcome to the program, Andrew.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks, Richo. Great to be talking to you from Townsville.

RICHARDSON: And how was it in the Deep North? Is it, have you had a good day?

LEIGH: It’s been terrific. Cathy O’Toole and I announced a tax clinic at James Cook University. This is an investment which will see James Cook University tax students reach out to the community to help low income taxpayers and small businesses with their tax affairs and also to try and build that culture of giving back to the community among tax professionals. And then, I’m Shadow for Charities and Not-for-Profits, so in the afternoon visited a number of co-operative businesses, including Defence Bank where I bought this pig here. The pig is sold by Defence Bank to raise money for their Defence Bank Foundation, which helps soldiers with PTSD. So any of your viewers who are looking for a piggy bank for the kids, jump on the Defence Bank website, pick up a pig, help out our soldiers.

RICHARDSON: Yes, helping our soldiers is certainly a good thing to do. I mean, I think it’s not a political argument. It doesn't matter who is in government. I don't think we've ever got helping returning soldiers right and it's something that we need to do. In fact, I spoke to a couple of veterans up in Townsville - there’s a group of them out there who ride bikes and things - and you read through their correspondence and gee it’s hard with the Department of Veterans Affairs. It's almost as if they're not clients, they're the enemy. They’re people to be beat, to be shown to be liars or something and life has to be made hard for them. It's a culture that we've got to change.

LEIGH: Yes, I used to sit next to Amanda Rishworth in Question Time, so we'd chat a lot about the issues around veterans which is her portfolio. It was Amanda who taught me that the veterans unemployment rate is now 30 per cent. That's higher than the Indigenous unemployment rate in Australia, which is also frighteningly high. So we've got to do a whole lot more to ensure that we better integrate veterans into the community. I think the United States has probably done a better job. Making sure that we've got good policies supporting veterans is vital.

RICHARDSON: Indeed. And now one of the things I know you have an interest in is in some of these massive media organisations, the information companies that are global, that are massive but who aren’t ever keen on paying tax. And of course Google and Facebook would be among the first names you come up with.

LEIGH: Yes, that's right. Almost all of us use Facebook and I think we give a big thumbs up to the product for its ability to connect us, but many of us give a thumbs down to the fact that Facebook is garnering more than a billion dollars of revenue in Australia and yet paying only about tens of millions of dollars of tax. That's true of Google, it's true of Facebook – we saw from their accounts yesterday. Now that's also true of a whole lot of other multinationals. Two dollars out of every five of multinational profits now go through tax havens. So we're seeing real abuse of tax havens by the top end of town. Places like the Cayman Islands not just where Eastern Australia Irrigation sets up, not just where Clive Palmer registered his private jet, but they’re also places where a lot of multinationals look to stash their profits – to the detriment of the Australian taxpayer.

RICHARDSON: Even Ireland is becoming something of a problem, is it not?

LEIGH: There's a range of jurisdictions that have set up arrangements which are gutting the Australian tax system. There's nothing wrong with multinationals headquartering in a place where they've got a lot of workers and where there's a sort of synergy of purpose, but where you see multinationals headquartering in places simply for tax arrangements you've got to worry about the impact that that has on countries’ revenue base. The less multinationals pay, the more we have to raise from Australian mums and dads. So we’re really keen on seeing multinationals pay their fair share. We've been working on this issue right through our six years in opposition with transparency measures, loophole-closing measures that will add over the course of the decade hundreds of millions of dollars to the budget bottom line.

RICHARDSON: It's no small deal, I understand that. I just wonder why the government hasn't been as keen. It would seem to me that the government needs money in the coffers as well, doesn't it?

LEIGH: They do. But you know, when they're faced with the choice, Richo, between the top end of town and adding to the revenue base, they pick the top end of town. You know, I've seen Josh Frydenberg turning up at conferences at the big end of town, attacking Labor for wanting to close debt shifting loopholes, where companies will use internal loans at overly high interest rates in order to move profits offshore. Josh Frydenberg will have a go at Labor when he's talking to the top end of town – he’s unwilling to close those loopholes. The result is that Australian taxpayers pay more tax than they need to. We end up cutting services, we end up having the doubling of debt which is now nearly $15,000 for every person in Australia - twice what it was when the Liberals came to office. So unless you're willing to take on the big end of town as Bill Shorten is, then you end up in this situation we are now with too much of the profits flying offshore and flying to places where frankly some of the worst of the worst hanging out. So tax havens aren't just a place where multinationals are doing business. They're also the location of choice for drug dealers and extortionists and kidnappers. Real lowlifes. You don't want to be rubbing shoulders with those folks.

RICHARDSON: No, you don’t. We can do a lot better than that. When I look at the islands of the world and places like that and you wonder why I guess that there is revenue in it for them, so they'll always go and try and seek it out. Doesn't the US try to apply pressure to countries like that to stop it, because they're the ones who suffer greatly from these tax havens, aren’t they?

LEIGH: You've been following this closely. One of the interesting changes in the US corporate tax reforms that have recently passed their Congress is setting a minimum 10.5 per cent rate on deductions. So we're watching that closely and aware also of some of the developments that are going on in Britain and France around multinational profit shifting. But Australia needs to be playing a leadership role on this. There’s a thing called the Base Erosion and Profit Shifting Project run by the OECD and the G20. We used to be on the steering committee of that, but we've dropped off. We've moved from the front seat to the back seat. That means we're not playing that critical leadership role on ensuring multinationals pay their fair share. Australia at our best as a medium sized economy really does step up to the plate. You know, I think of your time in government where on the trade front we had the Cairns Group and APEC helping to bring home those trading rounds, the Canberra Commission on nuclear weapon - we take that international engagement seriously. We see it as our role to play a leadership game and in global problems. Australia’s not doing that with multinational tax avoidance.

RICHARDSON: No we’ve got to step up to the plate too. What about industry in Australia? You know, people keep saying they're our manufacturing jobs are dying and obviously we can't compete when it comes to making cars or anything like that because our production runs are woefully small compared to other places. What can we do to create jobs in that kind of industrial environment?

LEIGH: I think there's great opportunities for smart manufacturing. Australians are fabulously ingenious and there’s a list as long as your arm of innovations that we've been involved in. I think about the collaboration between for example the Australian National University and Chinese production firms in solar panels. So our ANU, which is used to be in my electorate, was working on technology for identifying flaws in silicon that was able to really hone the quality of solar panels. We've got terrific niche opportunities around marine science. We've made an announcement this week of space science innovation. So we got to find those niches in a rapidly changing world. There's no reason why we can't be playing our part, for example, in artificial intelligence - an area that my colleague Ed Husic is very enthusiastic about - or in space as Kim Carr has announced. I know Bill Shorten’s got a great passion for electric vehicles and there's been work suggested around battery production which is central to electric cars. A whole lot of really useful niches there. But here I am in Townsville where they’ve been shedding manufacturing jobs under the Abbott-Turnbull-Morrison Government and many, many people are saying what is it about this government?

RICHARDSON: And Clive Palmer.

LEIGH: Indeed, yes. So this is the town where Clive Palmer made a whole lot of workers redundant, and they're still picking up the pieces.

RICHARDSON: Yeah it's remarkable that he is back splashing the cash to get people to forget it and he's having some success, which scares me a bit I've got to say. But these niches that we're looking for, do they really exist? I mean, is it possible to go, to find jobs in a place like Townsville? They talking about a big battery farm and that’ll no doubt get some jobs. But you know, it's very hard to replace something like a refinery.

LEIGH: It is, but there's a couple of hundred jobs that proposed battery farm here in Townsville. There's also great opportunities at James Cook University, which is not just a leader in Australia but around the world in terms of its research on marine science. There’s been jobs cut out of the public service here and we'd restore those. We’ve said that we'd put jobs back into the Department of Human Services. So there are smart things that an innovative government can do in order to make sure that the Townsville economy is working for everyone. We’ve had a literal decimation of the-

RICHARDSON: You haven't mentioned the word that no one wants to mention, that's called Adani, which has caused so much drama over the course of five years and the drama is still going on. Where do you stand on that, because if you're looking for jobs in Townsville, Adani is obviously the way to go.

LEIGH: If it stacks up environmentally and economically, then it should proceed. But we've said there needs to go through the proper approval channels and certainly we've been absolutely clear that Tony Burke has as a minister can't prejudge the decision. People who say Tony Burke to disclose his position on Adani now are basically saying he ought to ensure that any decision he'd make as Environment Minister is unlawful. You've served in that role, you know that the Environment Minister is a decision maker under the Act. These approvals aren't made by the Parliament. They're not made by the cabinet. They're made by the Minister and Tony Burke is very appropriately kept his powder dry there.

RICHARDSON: Well, you’ve got no choice. You can't announce where you stand yet until every avenue of environmental assessment has been exhausted. So it's still a little way to go. Mind you, they have a lot of tests, you know. The trouble with Adani is because it's such an issue, every time they pass a test somebody invents a new one. There's got to come, there has to be an end point where somebody finally says ‘okay - you passed every test, you're going, you're on, you're up’.

LEIGH: There's a range of approvals to go. It's a significant project. But as you say, Tony Burke looks at back at the mistake made by the Howard Government in 2004 in the case of a wind farm where they said before the election that they would rule out the wind farm and then after the election that decision was successfully challenged in the courts. I don't think anyone pro or anti Adani wants to see the Australian Government in a position in which it's paying a compensation claim which could run into hundreds of millions of dollars because we've breached the Act in the way in which we handled things. Tony has been the Environment Minister before and he'll handle this very responsibly if he becomes the Environment Minister after the 18th of May.

RICHARDSON: Where are we going, finally, on energy supply? Coal still seems to be vitally important and I think it will be for a few decades yet. And yet when you listen to Mark Butler, you get the impression he wants to shut coal mining down and coal fired power stations down. It seems to me there's no way in the world we could get enough renewable power at the moment. I mean, I'm hoping we find ways to do it in the future but right now it’s not on I don’t think.

LEIGH: Coal fired power stations were in many cases built in the 60s and 70s and now are coming to the end of their useful life. The challenge I think is to ensure for those affected communities that there is a clear path to closure. So we've announced policies around a just transition plan to ensure that the workers are looked after, but the private sector is not clamouring to build more coal fired power plants and I think it would be a strange decision by a government to say that we're going to step in and do something in the private sector is not doing. At the same time, the price of solar is falling very rapidly and there are an awful lot of jobs in boosting solar production. We've announced today that we'll see more solar panels on the roofs of Australian schools, which will reduce their electricity bills and of course create jobs for qualified installers there. So there’s a good renewable future. We also need to make sure that the transition takes place and all of that is in the best traditions of the Labor Party, a party which makes sure that we have those new technologies, that we're optimistic about the future but that we bring everybody along with us.

RICHARDSON: Yeah, as long as we keep people employed.

LEIGH: Exactly.

RICHARDSON: I part of a government which basically shut down TCF in Australia and when you do that - you know, textiles, clothing and footwear, there used to be an awful lot of it. We closed some big factories. And you know, you say to yourself and you cling to the belief that it's the right thing to do for the future, that in the end we're all, we all like to have tariff walls to pay for these things because we couldn't do them at the right price. But nonetheless when you look into the faces of those who are displaced, it's always hard. Very, very hard.

LEIGH: But we do look to that that example of the Hawke Government with its TCF Plan and Steel Plan. People like your late colleague John Button thought very carefully about how to ensure that the affected workers were looked after in that transition. As an economist, I'm an open markets guy. But because I'm in favour of open markets, I'm also a social democrat because I realise that those benefits of openness aren't always shared equally. We need a strong social democratic government to make sure make sure that the gains from openness are spread across the community. The Hawke Keating Governments did that very well and a Shorten Government would look to operate from the same playbook. Growth with equity, that inclusive growth mantra would be at the heart of how we would look to engage if we won government on the 18th of May.

RICHARDSON: All I can say is I don't know why it took so long to get you on the program, but you can rest assured, you'll be on again pretty soon. That was excellent. Thanks very much for your time, Andrew.

LEIGH: Great to chat, Graham.

ENDS

Authorised by Noah Carroll ALP Canberra.


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | Andrew.Leigh.MP@aph.gov.au | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.