6PR PERTH MONEY NEWS WITH KARALEE KATSAMBANIS
THURSDAY, 10 AUGUST 2023
SUBJECTS: Multinational tax reform, price gouging and petrol prices, and the Royal Australian Mint winning international coin prizes,
KARALEE KATSAMBANIS: I am actually delighted to be speaking to Dr Andrew Leigh, the Assistant Minister for Competition and Charities and Treasury this evening.
Good evening, Dr Leigh.
ASSISTANT MINISTER FOR EMPLOYMENT, CHARITIES, COMPETITION AND TREASURY ANDREW LEIGH: Good evening, Karalee. Great to be back with you.
KATSAMBANIS: It’s lovely to have you back on the show. Now, one thing I love is you’re always very available to our audience. You like to keep us up to date with what is happening in the Canberra sphere of some of the causes that you are, you know, in charge of and a lot of the legislation. You wear lots of different hats in Canberra.
One of the important things that we’ve followed on this show – and I know from all your extremely hard work during the election campaign before you came to power – is the multinational tax update. It’s something that’s pretty dear to your heart as well. You’ve really seen it through. What we can tell the listeners is the legislation has passed the House with support from both the Coalition and the Greens. However, what does it actually now mean? Can you explain that for our listeners and give a little bit of a background as well just in case some of them aren’t aware of it?
LEIGH: Absolutely, Karalee. Multinational tax dodging has been a big issue that a lot of Australians have been concerned about. It’s not just about making sure we’ve got more revenue; it’s also about creating a level playing field, because your local Perth small business isn’t thinking about stashing money in the Cayman Islands; they’re just thinking about producing better products and looking after their customers and staff.
And so by making sure that we’ve got a level playing field with multinationals, we produce a more productive economy. The package that went through the House this week improves transparency, so it requires big multinationals to let us know where their subsidiaries are headquartered. So if they’ve got a subsidiary in a tax haven, they’ve got to let us know about it. And also we’re changing rules around debt deduction to make sure firms aren’t inappropriately loading up on debt as a way of shifting profits offshore. And over the next four years it will add around three-quarters of a billion dollars to the government coffers.
KATSAMBANIS: That’s huge – three-quarters of a billion. Can I just ask you – and not naïvely but I’m sure a lot of our listeners may well be thinking it – but, you know, if they have to disclose to you where they might have their money stashed, as you say, in a tax haven or a subsidiary they’ve got to let you know, does this now, though, give them the green door to perhaps find another way to dodge tax as well, to perhaps set up another shelf company somewhere else and by the time the wheels of government, you know, get on top of it they’re already ahead of the pack with another scheme to dodge paying tax?
LEIGH: Yeah, I mean, transparency is about ensuring that investors know what firms are doing. Because increasingly it is a risk to the sustainability of your company to be stashing profits in a tax haven. So I think investors should have the right to know if they’re investing in a firm that’s doing business in a tax haven.
We understand that this won’t be the last piece of multinational tax reform to go through the parliament. This is an ongoing process of reform. And, indeed, over 140 countries have signed up to an OECD G20 reform package that will set a minimum 15 per cent global tax rate and stop the race to the bottom on company taxes that we’ve seen over recent decades.
KATSAMBANIS: Okay. Also something this week that caught my eye, wondering if you can shed a bit of light on it for our listeners, so the Australian Council of Trade Unions – the ACTU – it’s announced a review into price gouging with, you know, a sort of an angle about competition as well. They’re quite concerned with the costs and things. Of course, you’ve got the Australian Industry Group saying that, you know, the ACTU, they’re always wanting to do things like this but there’s no evidence of it. I know that former Australian Competition and Consumer Commission Chair Allan Fels will look into price gouging. But what’s it really going to achieve at the end of the day?
LEIGH: Hopefully it achieves a more dynamic economy with more productive firms and better paid workers. That’s the goal of competition. And that’s what we managed to achieve during the 1990s when the Hilmer competition review put in place reforms that ended up putting thousands of dollars a year into the pockets of the typical Australian household. So I’ve got a mountain of respect for Allan Fels who’ll be leading this inquiry. I think bringing his eye to the problem is going to be useful. He was, of course, head of the competition watchdog, but has then stayed in the public conversation around ensuring that we get more competition. More competition is important for all Australians. We don’t want to see an economy become increasingly concentrated, as it has over recent decades.
KATSAMBANIS: Dr Leigh, we have got a lovely listener Dianne – she must be reading my mind at the moment because she’s saying could I perhaps ask Dr Leigh about the price of petrol in Perth yesterday, $2.23 a litre, and just 24 hours before that it was $1.74. I know that petrol was right up across the east coast as well. It is an ongoing battle with this price cycle and this ridiculous 30 to 40 cents which just jumps in 24 hours. Dianne is actually asking on her text could you actually look into this? Like, with all your roles and responsibilities of competition and things that you do, to her, this is an important issue that the federal government should be looking at because she says this is price gouging by the oil companies.
LEIGH: Karalee, Dianne raises a really important issue. If there’s a competitive market, there shouldn’t be a cheap day to buy petrol. If there’s a cheap day to buy petrol, that’s a bit of a sign that the retailers are getting together in order to systemically drive the price up at certain time of the week. We know there’s been so-called ‘tacit collusion’. There was an economics paper a couple of years back focusing on the Perth market and the way in which certain stations are being used to signal prices and drive it up right across the board.
The ACCC has petrol monitoring powers and produces a whole lot of data on that. But we also need to make sure that there is a vibrant competition right across Australia in petrol and in other areas. Now, it goes from banking to baby food to beer. You’ve seen market concentration in a whole lot of sectors in Australia, and the markups that come with that, the rising gap between what it costs firms to produce something and what they charge to consumers.
KATSAMBANIS: Well, I tell you what, I was going to say to you I think you’ll win a lot of votes if you can sort out the petrol as well because rightly or wrongly, a lot of Australians, especially in Western Australia, they see the ACCC has really being a toothless tiger, always announcing what they want to do but then really little changes. So, look, if you can take that on board with your portfolio and, you know, have a special place in your heart for Western Australians with the petrol, I reckon that will be a winner.
LEIGH: Yeah, it’s a challenging issue. If it was simple, governments would have fixed it years ago. We’ve got the monitoring power, but ultimately more competition is what makes the difference, which is why I welcome the attention of the ACTU, Allan Fels and other experts such as the think tank e61 on this important competition debate.
KATSAMBANIS: Okay. And, look, this is the Money News Show and we always like a bit of a colour story and maybe something a little bit lighter to end our interview with you. A lot of alliteration there and things like that. The Royal Australian Mint, it has actually won two international Coin of the Year awards, and it is to do with colour as well. Explain for our listeners.
LEIGH: Coin of the Year is a competition which is run annually. This year it was held in Pittsburgh. And two Australian coins won – best circulating coin was our $2 honeybee coin, and most artistic coin was our ‘Beauty Rich and Rare’ Great Barrier Reef coin. It’s pretty prestigious for the Royal Australian Mint to beat out all the other mints around the world in producing these coins and really does suggest that these coins exemplify the term “mint condition”.
KATSAMBANIS: Well, there you go. You see, you’re going to be one up on me with that, and I was going to say it was selected from a field of over 500 coins. Absolutely lovely with the honeybee and, as you say, the Great Barrier Reef. I will have to wave the flag as a very, very passionate sand groper to say that next time you’re here in Western Australia we might have to get you to have a bit of a look around and perhaps you can – what’s the word – suggest to the Royal Australian Mint a beautiful landscape of Western Australia on one of our national coins for next year’s edition.
KATSAMBANIS: That is lovely. Dr Andrew Leigh, you’re a great friend of this show. You’re always very, very available. You like keeping us up to date with what’s happening in your portfolios of competition, charities and Treasury. Thank you very much. Is there anything you’ve got to add or you’d like to comment on tonight?
LEIGH: No, that’s terrific. Thank you, Karalee. Really appreciate the conversation.
KATSAMBANIS: That is lovely. There we go, everybody, that is the Honourable Dr Andrew Leigh. He is Assistant Minister for Competition, Charities and Treasury.