ABC AFTERNOON BRIEFING WITH GREG JENNETT
THURSDAY, 9 NOVEMBER 2023
SUBJECTS: ATO Corporate Tax Transparency Report; Multinational tax reform; Stage 3 tax cuts; Optus outage.
GREG JENNETT: Now, new data out today gives us a better idea which companies are paying corporate tax in this country and how much of it, for that matter. In total, the biggest firms liable to pay company tax are paying more of it, but that doesn't mean they all pay it. Assistant Minister for Competition and Treasury Andrew Leigh joins us in the studio. Welcome back, Andrew.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION AND TREASURY ANDREW LEIGH: Thanks Greg.
JENNETT: I think in foreshadowing this corporate tax transparency report today, you observed ‘when multinationals pay less, Australians pay more’. How so? Which taxes have Australians borne more of because of an underpayment by multinationals?
LEIGH: Greg, it's a simple fact that if we don't collect what we need to through the corporate tax system, then we either need to cut services or else tax ordinary Australians more. So, corporate tax fairness is an issue of sustaining the revenue base. It's also an issue of fair competition. You don't want Aussie firms competing against a multinational with one hand tied behind their back because the multinational is using some sort of a tax lurk that's not available to the local Australian firm. Transparency is a really important part of that.
JENNETT: Yeah, so, how much of the extra revenue collected, according to this report, is due to improvements in the net, if you like, as opposed to global factors that are just making profits higher, particularly for mining companies in this country?
LEIGH: Certainly, global factors such as commodity prices will cause company tax revenues to go up and down. But we also know that the Tax Avoidance Taskforce, which we boosted in last year's budget, has been successful in reining in a range of excesses. We've seen agreements between the tax office and a range of large multinationals, including Rio and BHP, which agreed to shut down their use of marketing hubs. That's important not just in terms of the payment of back taxes but also that going forward, they're not using these questionable tax arrangements.
JENNETT: Is that maxed out now the attempt to try and gouge more or correct historically low collections from multinational companies? Is it as good as it gets for the tax office when dealing with these multinationals?
LEIGH: Well, I wouldn't say it's gouging, Greg. I think it's making sure that we've got a level playing field operating and that firms are competing based on the products and services they offer, not on exploiting tax loopholes. We think there's more that can be done through the Tax Avoidance Taskforce. We think there's more that can be done also through tightening tax laws. That's why we've got a bill before the Parliament right now to close down the debt deduction loophole. It's why we'll have more legislation coming before the Parliament to implement the worldwide 15 per cent corporate tax floor, something that's really important in pushing back against that race to the bottom that we've seen in recent years over corporate tax.
JENNETT: Yeah, we'll keep an eye on that. I'll take you to a major decision of the week. Of course, the Reserve bank increased interest rates this week due to the persistence of inflation. Where does inflation need to be on the 1 July next year in order that the unleashing of $20 billion worth of stage three tax cut revenue doesn't itself fuel inflation?
LEIGH: Well, those tax cuts are legislated, Greg, and that's something that has bipartisan support.
JENNETT: Will it be inflationary, though?
LEIGH: What we're focusing on is providing cost-of-living relief, which is targeted. At the same time as bringing down the first surplus in 15 years. If you like, as a Commonwealth government, we're acting like a householder who chooses to pay a bit more on the mortgage when they're able to. And that cost-of-living relief, the cheaper medicines, cheaper childcare, the energy bill rebate, that's making a tangible difference in reducing inflation. It's taking about half a percentage point off inflation.
JENNETT: Yeah, I don't want to labour the point on stage three. It is, of course, as you say, legislated. But $20 billion, according to the Parliamentary Budget Office, in its first year, that's its value. Has Treasury done work on its inflationary effect in that first year?
LEIGH: Well, Treasury looks at all of the programs in place, including those that are legislated. They'll take those legislated tax cuts into account in making their inflation forecasts. We've seen inflation fall quite substantially, and we've still got unemployment sitting below 4 per cent, which is a resounding success for the Australian economy. Half a million jobs generated just in this first half of our first term in office.
JENNETT: All right, now, look, we've come at the Optus network fail in a few different ways on the program today, but you have responsibility for the ACCC, amongst other things. Andrew Leigh, from a competition point of view, would the devastation of yesterday's network meltdown be less if Australia wasn't a duopoly market? Effectively, I know there are more than two players, but effectively two players in mobile networks.
LEIGH: It's a great question, Greg, and certainly, you saw customers in Amaysim and Dodo being affected by the outage because they're running off the Optus network. It is the biggest communications failure of a mobile system in Australian history. Some one in four Australians suddenly saw just an SOS logo on their phones, and systems weren't restored for about 14 hours. Optus has had some $2 billion Australian wiped off its value on the Singaporean Stock Exchange. And the outrage of consumers, I think, will lead some to decide to switch, others will be seeking compensation. And that's a matter that the management team of Optus will need to address.
JENNETT: Anything that the ACCC would address as a consumer law matter?
LEIGH: In the first instance, it's ACMA looking into this, and we're also conducting a post-incident review. Michelle Rowland has announced that. That'll go to issues such as accessibility of the 000 emergency network. We're concerned to make sure that we learn the lessons of this really problematic outage, which appears to have been a technical fault but whose impact has been seismic. It affected hospitals, train networks, people using their phones to pay. It reminds you how reliant we are on our smartphones right now. And as you say, the risk in a relatively concentrated market.
JENNETT: No, it really does. After some initial interest in whether it was cyber-caused or not, it almost doesn't matter in the end because the effect was devastating. All the same. Andrew Leigh, really appreciate you rejoining us once again on the program.
LEIGH: Always a pleasure. Thank you.