Andrew Leigh

E&OE TRANSCRIPT

RADIO INTERVIEW

6PR MORNINGS

TUESDAY, 1 FEBRUARY 2022

SUBJECTS: Labor’s plans to make multinationals pay their fair share; Tax policies.

LIAM BARTLETT, HOST: We're joined this morning by Andrew Leigh. Andrew is the federal Labor Shadow Assistant Minister for Treasury and Charities, and will have a lot to do with this sort of tax policy during the campaign. How are you this morning, Andrew?

ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: I'm terrific, Liam. How are you?

BARTLETT: I'm okay. Now, let's get to the bottom of this. What does your leader mean by that reference, the issue of multinationals?

LEIGH: Well, Anthony's concerned that at the moment two-fifths of multinational profits are booked through tax havens, places like the Bahamas and the Cayman Islands. And that means that if you're a regular Aussie business competing against a multinational, then you're doing it with one hand tied behind your back. Because multinationals are making use of the same sort of hidey holes that are being used by terrorists and kidnappers and drug runners. Tax havens have become a cancer on the global tax system, and so Anthony Albanese is determined to do something about that - not only to ensure that we get more revenue into the government coffers, but also because it's not fair on regular Australian firms to be going up against multinational tax dodgers.

BARTLETT: Well, Andrew, when you say two-fifths of them use tax havens, now what sort of volume are we talking about? What sort of money could you make out of a reform in that area?

LEIGH: Well, it's billions of dollars sloughing through tax havens right now, and it's estimated that the Australian super-rich have some $100 billion sitting in tax havens. So it's an issue of fairness and equity. These tax havens are being used almost exclusively by moguls and mega corporations. Regular mums and dads are not thinking about how they set up structures in Bahamas, but there's a lot of sharp suited accountants and lawyers that are doing just that. It's deeply unfair and Labor's committed to doing something about it. And honestly, I was bemused when I saw Jane Hume and Michel Sukkar come out yesterday and attack Anthony Albanese for wanting to get tough on multinational tax dodging. I would have thought they would have said instead, ‘it's a great idea, tell us what we can learn from you’.

BARTLETT: Well, we have heard some of this rhetoric in the past, from both sides of politics, both sides, because even the term multinational - it's an easy target. But when it comes down to the nuts and bolts, you know, sometimes these people have too much money and too much lobbying power. And in the end, nothing's done.

LEIGH: You've got to look at exactly what happened. And in our last term in office, for example, we put in place a number of measures that returned money to the budget bottom line which the Liberals voted against. One of those measures, just to be specific, saw Chevron pay an additional $300 million of tax. And the Coalition since they've come into office have done precious little. The movement has been on the international stage, where the coalition have turned up but not said very much. Unlike where Labor was leading this debate, they've really moved to the back seats. And that's a pity for Australian firms. It's a pity for Australian taxpayers, who end up having to pay more when multinationals pay less.

BARTLETT: So to get rid of some of these tax havens for them or to make sure that they couldn't use these tax havens, you'd have to do what, Andrew? You'd have to look at, look at the way these multinationals declare their income or the source of their income?

LEIGH: Yeah, that's right. And I think, Liam, we would start with the deal that was struck in the OECD and G20 last year between around 100 countries, which put in place specific measures for extremely large firms with a turnover above 20 billion euros and also for very large firms with a turnover above 750 million euros. And that's looking at a floor level for company tax rates, a fairer distribution of revenues across countries, and ensuring that we move quickly on those measures has got to be in the interest of the Australian taxpayers. I find it bizarre that Michael Sukkar and Jane Hume would be ruling this out.

BARTLETT: Would you also look at the way that some multinationals are allowed to declare their cost base artificially, using the so-called marketing hubs, places like Singapore?

LEIGH: Absolutely, and Labor made a high priority of the marketing hub issue when we were last in government. That was ultimately an issue which was again one of tax fairness. If you're moving the location of your economic activity artificially, then that's going to be a real problem. And frankly, this has gotten harder in a world in which a lot of production is intangibles. If you’re churning out cars, it's pretty obvious where you're making the car. But if you're churning out bits and bytes, then it's easier for companies to pretend that the location of their economic activity is in a tax haven – or, as in the case of Apple a few years ago, actually have a company which is stateless for tax purposes. A bit like Tom Hanks in that movie, ‘The Terminal’, stuck in no man's land because Apple didn't want to pay tax.

BARTLETT: It is patently ridiculous. So you mentioned Apple. I mean, I take it you're looking at the likes of Google and Facebook or Meta or whatever they call themselves. Well, what about industrial? You mentioned Chevron. I mean, who else do you have in the in the sights?

LEIGH: Well, it's really that getting the principles, right. So I think the technology firms have been among the biggest abusers of these systems, and making sure that they're not exploiting loopholes has got to be vital for Australians. We need a system in place which applies to these large firms with turnover above a billion Australian dollars. I think it's appropriate that when the international deal was struck last year that it excluded mining companies from the arrangement of distributing revenue across countries, but the focus for us really is on those technology firms.

BARTLETT: Andrew, you really - I mean, you've got a lot of money to make back. There's generational debt. Now, you know, over a trillion dollars in debt. This pandemic has left us so well and truly without anything in the kitty. Where else are you going to find the money? Is negative gearing off the table?

LEIGH: Yes, we've said that we won’t be taking that measure to the next election. But we've also said that we need to stop the rorts. Car park rorts, sports rorts, overpayment for land for Western Sydney Airport. All of those have cost the budget bottom line. The Morrison Government gave $20 billion to firms with rising revenue through the JobKeeper program, an issue that you've been very, very engaged on. Those sort of rorts are more likely when you don't have a national integrity commission in place. So we need sounder structures to ensure that we get back to good government in Australia.

BARTLETT: We need to make the money back though, that's the problem, isn’t it? It’s one thing stopping the rorts. You have to make the revenue. What about an increase in the GST?

LEIGH: No, we've ruled that out. We wouldn't be taking an increase in GST to the next election. We've said that our focus is on multinational tax dodging, which is an issue that I think has become more and more important as Australians have seen the way in which multinationals have exploited the global tax system. People's patience has run out with this, Liam. Australians recognise that multinational companies need to play by the same rules as domestic companies if we're not to have a situation in which local firms are playing on a tilted playing field.

BARTLETT: Alright. I look forward to having a chat when you've got more detail, and I have a feeling we'll be talking a lot more between now and the next election. Thanks very much for your time this morning, Andrew.

LEIGH: That'd be great. Thank you, Liam.

ENDS

Authorised by Paul Erickson, ALP, Canberra.