ABC CANBERRA MORNINGS WITH ADAM SHIRLEY
TUESDAY, 24 OCTOBER 2023
SUBJECTS: ATO’s Multinational Tax Avoidance taskforce; Australian companies using foreign tax havens; future of the Australian Institute of Sport.
ADAM SHIRLEY (HOST): You do your work, you pay your taxes. Although if you're not a multinational conglomerate who can afford some pretty skilled accountants, you might be paying, in percentage terms, a lot more. Multinational tax avoidance is an issue that the then opposition, now Federal Government pledged to crack down on, so that you weren't paying an unfair amount compared to those big companies. Andrew Leigh is the Assistant Minister for Competition, Charities, Treasury and Employment. He's the Federal Member for Fenner in the ACT. Dr Leigh, good morning to you.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION, TREASURY AND EMPLOYMENT ANDREW LEIGH: Morning, Adam. Great to be with you.
SHIRLEY: How is that work progressing? And is it fair to say still that some regular Australian workers are being dudded compared to multinationals?
LEIGH: When multinationals pay less, Australians pay more. So, the fact is, we need to make sure they're paying their fair share. After a decade when the coalition was on the go-slow on multinational tax dodging, we're on the case. The Tax Avoidance Taskforce has now reported that it managed to claw back some $6.4 billion last year. These are taxes that should have been paid but weren't, and were followed up by the Tax Avoidance Taskforce. We're also looking at ways of tightening the laws. Multinationals right now have too many ways of dodging tax that just aren't available to your regular Canberra small business.
SHIRLEY: Who did you manage to get the money back from?
LEIGH: The Tax Avoidance Taskforce don't publish a list of the taxpayers who they've interacted with. But we do know there have been a number of tax settlements last year with multinational firms, among them Ampol and Rio Tinto. Going back a couple more years, Chevron, BHP and Apple. So, there's been a range of firms that have made public the fact that they've settled tax affairs with the Tax Office. And importantly, in a number of those cases, Adam, the Tax Office didn't just settle back taxes, but they also changed the arrangement going forward, shutting down the use of Singapore as a marketing hub for Rio and BHP with their iron ore exports, for example.
SHIRLEY: So, a couple of names you've mentioned there, for example. Tell me about the laws that might well change that you said the government is considering doing.
LEIGH: Yeah, one of the tricks that multinationals have been using is what's called debt deductions. Basically, how it works is you set up a subsidiary in a low tax jurisdiction, that subsidiary makes a loan to the Australian company and then the interest on that loan is claimed as a deduction. Right now, there's too many firms that are minimising their tax bill using that kind of arrangement. So, we've got a bill on what's called thin capitalisation making its way through the Parliament -- now in front of the Senate – that’ll return millions of dollars to the budget bottom line. But it’s not just about the revenue, Adam. It’s also about tax fairness. It’s also about ensuring that firms are competing based on who can look after their customers and their staff the best. Not on who can find the best tax lurk.
SHIRLEY: So do you have projections about the amount of money you anticipate you'll claw back that will then end up in Australian infrastructure and will benefit Australian citizens?
LEIGH: It's going to be hundreds of millions of dollars through this measure. And then we'll be moving next year to look at implementation of what's called the two-pillar agreement struck at the OECD a couple of years ago. That sets a 15 per cent floor on the company tax rate globally and stops this race to the bottom that we've seen on company taxes worldwide over the last couple of decades. It's especially important for a country like Australia that derives a disproportionate share of revenue from company taxes that we don't have this race to the bottom. What the two-pillar agreement says is if a country isn't charging 15 per cent company tax, then other jurisdictions can ask for that tax to be paid.
SHIRLEY: Do you anticipate you've got the support in the Senate from either the Crossbench, including independents or the Liberal Party, to make sure that happens?
LEIGH: Yeah, I certainly do. The Bill passed the House on the voices. The Liberals didn't vote against it. So, it was pleasing to see that even although I've been critical of what they did in government, they didn't stand in the way of us closing this particular loophole.
SHIRLEY: Matt, with a specific country case, "does Andrew Leigh plan to ditch the international tax treaty with Ireland, which enables them to pay zero or minimal tax there instead of here?" Your response.
LEIGH: Look, we're not ditching tax treaties, but Ireland is affected by the 15 per cent floor. Its company tax rate is below that level and so that international agreement will bring it up. To ditch the Irish tax treaty would be to disadvantage a whole range of Irish Australians who are living and working here, or vice versa. And so we don't intend to take such a radical step, but we are aware that it's important for Ireland, like other countries, to move with the international consensus of saying we can't just all be racing towards the bottom on company tax rates.
SHIRLEY: It is 17 minutes to nine, all clear on the roads. Dr Andrew Leigh, Federal Member for Fenner, the Assistant Minister - well for Treasury, for Charities and a few other portfolios is with us on ABC Radio Canberra. Dr Leigh, to another issue we were talking about earlier. The AIS and its presence and its future is going to be reviewed by the Federal Government. What is the government playing at here, if the ASC itself just reviewed the potential move a year ago and said, "no, it needs to stay in Canberra".
LEIGH: Adam we need to make sure that the Australian Institute of Sport has a long run future. As a Canberran, a proud advocate for our city, my view is strongly that it should stay here. There are six sports that currently call the AIS home and last year there were more than 4000 people who came through -- coaches and athletes -- to do programmes at the AIS.
SHIRLEY: Have you told other Federal Ministers that? And what has there been response to justifying this review?
LEIGH: Yeah, look, I've certainly made that strong case, but the AIS is not what it used to be. I think any honest assessment of that would recognise that if the AIS is to stay in Canberra, then we need to have a long term plan for its future. That's what this review will do. So, I don't see this review as being a risk. I see this as an opportunity to make a strong case for an AIS in Canberra and for the interplay across sports. So, in my amateur running, I benefit from the counsel of Dick Telford, who's one of the original sports scientists to the AIS. Dick's trained a whole lot of medium and long distance runners, but he's also worked with people across other sports as well. So, you get that cross fertilisation of ideas in nutrition science and psychology and physiology. That's the genius, the AIS model and it's why I think it should stay in Canberra.
SHIRLEY: So, can you confirm this morning the Federal Government's review will not include considering moving it?
LEIGH: No, I think it's going to be looking at all those options. I'm just telling you my strong advocacy alongside Dave and Alicia's will be to have the AIS stay here in Canberra.
SHIRLEY: We will watch it with interest. Thank you very much for your time today.
LEIGH: Thanks so much, Adam.