AFTERNOON BRIEFING WITH GREG JENNETT
WEDNESDAY, 17 MAY 2023
SUBJECTS: PwC scandal, deductible gift recipient listings, Stage 3 tax cuts, Housing Australia Future Fund
GREG JENNETT (HOST): Andrew Leigh, thanks for coming back on the programme. Why don't we start out around multinational taxation? Because it does seem with each and every further investigation by the Parliament, the PwC scandal only grows. For those who aren't familiar peddling ill-gotten information and profiting from it, AusTender shows that PwC still has on foot, millions of dollars worth of contracts. Will they pay a price with this government, financially, I mean, because of this sorry episode?
ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY ANDREW LEIGH: Well, the first thing to say, Greg, is this was an appalling, shocking breach of trust by PwC. To effectively take this insider information and to use it to peddle a scheme for their clients is utterly outrageous. And I think the reaction you've seen across the community reflects that. I'm glad they set up an inquiry with Ziggy Switzkowski. I'd urge them to fully release the results of that inquiry. In terms of what it means for PwC's tenders, Katy Gallagher, as Finance Minister, has asked for a review of the conditions under which tenderers are selected and whether such a code of conduct should go to behaviour of this kind.
JENNETT: Would that be retrospective in this case, though? How might that come to impose any penalty, if any at all, on PwC?
LEIGH: Greg, we tend not to be retrospective. It's not ideal public policy, so I think we'd be looking at making changes going forward. But make no mistake, this is shocking behaviour by one of the country's leading firms. We're taking it very seriously. The Treasurer has asked the Board of Tax to review recommendations which were put forward by an independent inquiry in 2019, but left on the shelf by the former government. We've provided additional resources in the budget before last to the Board of Taxation in order to address these issues and we're reviewing all of the confidential consultation processes in place.
JENNETT: Well, that was going to be one of my questions. Are confidential consultations still taking place? Not across government, let's limit it purely to Treasury at the moment. Are they ongoing and can we be satisfied that they aren't being breached?
LEIGH: They do take place, and the reason for that is that we don't want unintended consequences. We want to make sure in the public interest that we get these things right first time around. And it's in the public interest to have a consultative government. We like engaging with business and other stakeholders. We do that in the national interest.
JENNETT: Could this be an example, it's not your call to make, but you, I think, are free to express an opinion, could this be an example of systemic corruption at the federal level, the likes of which might be paid attention to by the Commission?
LEIGH: Look, I know referral has been made by a Greens senator to the National Anti-Corruption Commission. We'll leave it to make its own decisions on this matter. I can say from a government standpoint, we're deeply concerned about this. It is an extraordinary breach of trust we are furious at the firm and the repercussions of this, what it means to take information ascertained as an insider, having signed confidentiality agreements, and then use that to make up a scheme which attempts to make an end run around the very laws you're being consulted on.
JENNETT: Yeah. Now, Ziggy Switkowski has been brought in by the firm to look at it, but as many have observed, that doesn't make it an independent inquiry when they're paying for your findings. What approaches a truly independent investigation so far into all of this?
LEIGH: We'll wait and see what the results of that inquiry are. As I said before, Greg, I want it to be publicly released in full. In terms of what we're doing as a Federal Government, we're reviewing all of those consultation processes - the Treasurer has asked the Secretary of Treasury, the head of the Tax Office, the Chair of the Board of Taxation, to look at each of their consultation processes and see whether or not they need to be tightened up as a result of what we've learned.
JENNETT: All right, let's move on to some other things that you're responsible for Andrew, charities regulation. With the Voice referendum coming up. Various organisations, particularly notably from the No side, have sought deductible gift recipient status. Then there was a merger of one of those groups into another. Where does that leave that process or, for that matter, any other organisation that wants to get registered for this?
LEIGH: Well, Greg, there was a Yes case body which was given specific deductible gift recipient listing in the October budget last year. There was about a year's lead time into doing the paperwork for that. A No case entity approached us ahead of the May budget. We did the paperwork much more quickly and ‘Recognise a Better Way’ was given specific listing in the May budget. It's now made a decision to merge with another entity and so it won't automatically carry over that deductible gift recipient status into the merged entity. That'll be a conversation they'll need to have with Treasury if indeed they are interested in pursuing specific listing.
JENNETT: And do you expect and are you resourced for further applications? Because the nature of the AEC oversight arrangements from here on are that entities that are spending money over a threshold will have to declare it. Does that carry over into your area of charities regulation?
LEIGH: Well, Greg, the process of specific listing to be a deductible gift recipient is an unusual one. Most charities have their deductibility through a particular category rather than because they're named in the Tax Act. We tend to consider those applications twice a year in the budget and in the mid-year economic and fiscal outlook. And so generally you would think that the next opportunity to consider specific listings would be after the referendum has taken place. We've had one Yes case or entity and one No case entity specifically listing listed. I don't anticipate we'd be listing more.
JENNETT: Fair enough. A couple of other quick ones, Andrew Leigh. PBO costings have come out on Stage Three tax cuts topping $310 billion. Now you're on the record as saying Labor must never renege on its 2022 election commitment. Does that hold or why should that hold for all time and at any cost?
LEIGH: We haven't changed our position on that tax cut, Greg. It's legislated, takes effect from the middle of next year.
JENNETT: But people within Labor are at least agitating for it. Would you acknowledge that?
LEIGH: Look, when they were debated before the Parliament, we certainly had our say, but at the last election, we made clear that we wouldn't be changing them.
JENNETT: And what would it take to change that? I mean, I note that they come in on the 1st of July next year, but is it a saleable proposition to revisit them? If it were taken to an election as a commitment.
LEIGH: We've made clear we won't be changing our position there, Greg.
JENNETT: All right, housing also in the run up to National Conference. It's on the record now that people want Labor to reexamine negative gearing and capital gains on investment properties. Are you open to that?
LEIGH: We've got a big housing agenda. We want to put the Housing Australia Future Fund through the Senate, which will produce 30,000 social and affordable homes, including 4000 for women and children fleeing domestic and family violence. We've invested into the National Housing Agreement, we've invested into homelessness. We had the Build to Rent initiative in the Budget. And of course, we increased Commonwealth Rent Assistance by the biggest amount in 30 years.
JENNETT: It might not be enough, though. Certainly it might not be enough for internal critics who are both within the rank and file membership of Labor, but also within the caucus.
LEIGH: You can argue that about any specific housing measure, I think, Greg, but the totality of what we're doing in housing is very substantial. More substantial still if the Liberals were to support building more homes. What's crazy about Peter Dutton's position right now is he says that building more homes through the Housing Australia Future Fund would be inflationary. And yet in his own budget reply, he wanted a measure which will allow people to raid their own super to fuel demand in the housing market. Somehow he thinks that's not inflationary. He doesn't know his left hand from his right when it comes to housing, should get out of the way and back the Housing Australia Future Fund.
JENNETT: It does sound like that one will be dragged around as a campaign debate at the next election too. Andrew Leigh, that's all we've got time for today. Thanks so much for joining us again.
LEIGH: Real pleasure.