Andrew Leigh

The future of Australia's tax system: opportunity, growth and integrity

Speech to the Corporate Tax and Transfer Pricing Summit

Sydney

It is always very gratifying, when I come to events like this, to see so many smart people coming together to work through the hard questions about what our tax system should look like for the future.

We’ve come together at a time when these questions could not be more topical, or their answers more contested. For those of us who’ve been toiling away in the tax space for some time, it has been both surprising and exciting to see usually-esoteric issues of tax system design move to the front and centre of the political debate in recent months. People care about tax at the moment; people are interested in tax at the moment, and that means there has rarely been a better time for your ideas to have an impact in the wider community. To be a tax expert today is like releasing a breakthrough pop hit after years of playing in grungy pubs – one morning you wake up, and lo and behold, the world wants to listen to you.

We’ve been hearing a lot recently about how important Australia’s tax system is – how it can support or obstruct growth; how it can encourage investment or scare it away; how it can make us an international magnet for business or see us lag behind in international competitiveness.

As the member of Labor’s shadow ministry whose primary responsibility is tax, I wholeheartedly agree that our tax settings matter. But just as the federal budget is not the entire economy, we shouldn’t confuse building an efficient and equitable tax system with the much bigger task of setting Australia up to grow and flourish.

In my time with you today I want to look at how the tax system intersects with a range of other policy settings and choices which have as much – if not more – influence over whether we can continue as a country of fair opportunity and strong growth. In looking to the global picture and questions about multinational tax policy, I’ll also argue that we should be thinking about Australia’s international competitiveness in far broader terms than how big a tax break companies can get if they do business here. 

Over the weekend I got together a group of runners to tackle Hobart's Point to Pinnacle half-marathon and raise money for World Vision. The team was named after my grandfather, Keith Leigh, who died while running up Mt Wellington in 1970. 

ABC Hobart came along to follow our progress; check out their story here...

HELPING ALL CANBERRANS HAVE A CHRISTMAS 

Today I was delighted to join UnitingCare Kippax to launch their 2015 Christmas gift drive.

The Let’s Give Everyone a Christmas initiative collects donations of gifts and hampers for Canberra families that are doing it tough and might otherwise miss out on a merry Christmas.

ROBOTS, REMUNERATION AND RESTRUCTURING: HOW DO TECHNOLOGY AND INEQUALITY SHAPE ONE ANOTHER, AND WHAT SHOULD WE DO ABOUT IT?* 

Annual Sir Leslie Melville Lecture

Australian National University

Sir Leslie Galfreid Melville was a remarkable Australian. Born the year after federation. Trained in engineering and science before wisely settling on economics. Inaugural professor of economics at Adelaide University at age 27. Founder of what would become the Reserve Bank’s research department. Leader of Australia’s delegation to Bretton Woods. ANU Vice-Chancellor for most of the 1950s. Appointed to chair the Tariff Board by McEwen, it is to Melville’s enduring credit that he quit the post rather than succumb to McEwenism. 

Having been born at the dawn of the twentieth century, Leslie Melville lived to see the start of the twenty-first. As one obituary noted, ‘there has not been another Australian economist to hold the range of jobs that Melville did’.[1]

It is virtually impossible to think about Melville’s life without being conscious of the technological changes that took place during it. The twentieth century – or the ‘Melville Era’, as Australian economists might call it – saw an explosion in technologies. In transport: planes, helicopters, mass-market cars and space shuttles. In communications, radio, television and the Internet. In health, antibiotics, sewered cities, the pill, and genetic engineering. Not to mention atomic bombs, vacuum cleaners, smartphones, radar, the bra, and plastic. And yet for most of the twentieth century, we not only saw rising living standards, but falling inequality. Melville’s working years – the 1920s to the 1970s – saw the largest reduction in inequality in Australian history. 

My focus today is on two challenges: how do we continue the pace of innovation in the twenty-first century that we saw in the twentieth? And how do we ensure that prosperity is broadly shared? By acknowledging the tendency of technological change to increase inequality, we can harness the gifts of Prometheus without suffering their destructive tendencies. As it happens, I will argue that a single policy recommendation offers the greatest promise to make us more entrepreneurial and more equal.

If an increased GST is the answer, then you're asking the wrong question

12 November 2015 

Australia faces a number of serious economic challenges right now. We have growth running below trend and recently downgraded by the OECD. Growth has been steadily downgraded in every budget since the first Abbott-Turnbull budget. We have got inequality now running at a 75-year high. We have had a generation in which earnings have risen three times as fast for the top 10th as for the bottom 10th of income earners. We have got housing affordability increasingly pushing out of reach of average Australian households, with young families in Sydney now facing the prospect of median house prices at more than $1 million. These are big challenges for Australia and the GST at 15 per cent would make all of them worse.

GOVERNMENT PUTS TAX SECRECY AHEAD OF PASSING MULTINATIONAL TAX PLAN

Treasurer Scott Morrison cares so much about helping huge companies hide their tax dealings that he is now delaying the passage of his own multinational tax bill to do so.

Yesterday the Senate stood up for tax fairness by passing the Multinational Tax Avoidance Bill with important amendments that restore tax transparency.

The Senate’s fair amendments reversed the Government’s attempt to gut Australia’s tax transparency laws. As a result, private companies earning more than $100 million a year would continue to be included in transparency reports published by the Australian Tax Office. 

Tax privacy for the uber-rich

12 November 2015

'Protecting tax privacy for the uber-rich is a strange thing to take a stand on.' I wish I could claim credit for those words, but that is the title of Lenore Taylor's summary in The Guardian of the events of today. Rather than agree to getting its own multinational tax bill through the parliament, today has seen the government prefer to put the House in opposition to the Senate.

The government's multinational tax bill is a bill about which Labor has always been somewhat sceptical. After all, when one looks at the budget papers, where revenue estimates should be you only see a series of asterisks. But we have supported the government's multinational tax efforts on the basis that bipartisan activity in this area ought to be encouraged. In the same spirit, we would encourage the government to look at Labor's $7.2 billion plan for closing debt deduction loopholes.

SENATE SUPPORTS TRANSPARENCY OVER SECRECY

Joint Media Release with Senator Sam Dastyari

The Senate has today stood up for tax fairness by passing the Multinational Tax Avoidance Bill with important amendments that restore tax transparency.

Today’s amendments have reversed the Government’s shameful attempt to gut Australia’s tax transparency laws. Private companies earning more than $100 million a year will continue to be included in transparency reports published by the Australian Tax Office.

TAX PAPER DELAYED FOR MORE TURNBULL TALK

Joint Media Release with Shadow Treasurer Chris Bowen 

Malcolm Turnbull loves the sound of himself talking about tax so much he has put off releasing the Government’s much-anticipated green paper until 2016.

The Government will now go into its third year in office without having even released its ideas on tax reform, let alone a real plan. 

This is acknowledgement from the Government that this term has been a wasteland when it comes to tax reform.

In an attempt to avoid acknowledging the delay, Treasurer ‘Sneaky’ Scott Morrison began slipping the new schedule into interviews today:

“There’s a budget next year, there’s a green paper we will be looking to release next year…”

- Scott Morrison, AM, 10 November 

LABOR WELCOMES LATEST MAJURA PARKWAY MILESTONE

Joint media release with Shadow Minister for Infrastructure Anthony Albanese and Senator for the ACT Katy Gallagher

Labor welcomes the completion of the Molongo River and Fairbairn bridges as part of Canberra’s $288 million Majura Parkway project.

The project will reduce traffic congestion for Canberra motorists by linking the Federal and Monaro highways and diverting trucks and other traffic moving through Canberra away from the city centre.

It will deliver more than $1 billion worth of economic, social and environmental benefits and carry at least 40,000 vehicles a day, including 6000 trucks, by 2030.

The ACT Labor Government and the former federal Labor government funded the project in 2011, each contributing $144 million.