6PR 882 AM WITH KARALEE KATSAMBANIS
WEDNESDAY, 12 APRIL 2023
SUBJECTS: SUBSCRIPTION SERVICES, COST OF LVING, COMPETITION LAWS, ECONOMIC OUTLOOK, MULTINATIONAL TAX AVOIDANCE
KARALEE KATSAMBANIS: I am delighted to welcome my next guest – Assistant Minister for Competition, Charities and Treasury, the Honourable Dr Andrew Leigh. Good evening.
ANDREW LEIGH: Good evening, Karalee. Great to be with you and your listeners.
KARALEE KATSAMBANIS: It is lovely to have you on board. Now, look, Dr Leigh, the reason why I’ve got you on this evening is you’ve recently been calling for business to get a fair go and fair competition. You recently spoke at the COSBOA National Small Business Summit, and you’ve called for the shifted narrative on, you know, unfair contract terms and trading practices in a bid to spark what we could call market stimulation and greater productivity. How is this going to have a good impact, especially here in Western Australia?
ANDREW LEIGH: Well, Karalee, any sports fan knows that fair competition is really fundamental to the game. You don’t get a good football game unless you’ve got a fair set of rules. One of the things we’ve been worried about recently as a federal government is that the economy isn’t dynamic enough because there’s not enough fair competition taking place.
There’s too many sectors where there’s just one or two big firms completely dominating things. And the small guy just doesn’t get a look in. What we want to do is ensure that there’s more start-ups and that there’s more market dynamism, more people switching jobs to get those useful pay rises and more productivity growth, which ultimately is the foundation for living standards.
KARALEE KATSAMBANIS: So, Dr Leigh, just to break it down to layman’s terms for a lot of our listeners who are perhaps on the Easter holiday break, they might be driving around this evening listening, I don’t think anyone’s got a problem with government looking into fixing unfair trading practices. But, you know, tell us what’s happening at the moment and how, you know, a lot of the current regulations are sort of becoming a bit of an impediment to market competition.
ANDREW LEIGH: Yeah, I mean, one of the problems that we’ve got is that in the digital space there’s the so-called dark patterns. I don’t think anyone who’s ever tried to unsubscribe from digital services found it as easy as it was to subscribe in the first place.
KARALEE KATSAMBANIS: It’s a nightmare. It’s a nightmare sometimes.
ANDREW LEIGH: Right. It is the old Hotel California story, right – you can checkout, but you can never leave. They give you all these confusing menus, they give you all these different nudges to try and get you to stay. And that, according to the competition watchdog might well be an example of an unfair trading practice.
We’ve seen other instances of dodgy sellers going door to door offering free laptops to people to sign up to TAFE courses that wasn’t caught by the existing law. And the competition watchdog again says that might be a cause for an unfair trading practices action.
Britain, the United States, Europe has an unfair trading practices prohibition; Australia doesn’t. And in its place, we’ve had this series of industry-specific codes, like the Dairy Code and the Horticulture Code. Those things can be fine as measures for specific industries, but we can’t get to a situation where every industry in Australia has its own code. And that’s why we’re looking at this overall economy-wide ban on unfair trading practices with the work being led by my colleague Stephen Jones.
KARALEE KATSAMBANIS: So, let me just ask you, I mean, as I said, you’ve noticed an increase in market concentration over the past decade or so and you’re trying to, you know, encourage better conditions for smaller businesses to thrive. How does Perth and Western Australia in general do regarding market competition, both nationally and internationally?
ANDREW LEIGH: Yeah, it’s hard to get good data when we drill down on that level because we get to the level of firm confidentiality. But we do know that if you look at the mining sector, for example, that’s fairly concentrated, although mining exploration and mining services tends to have a little bit more competition in it. It’s really important that we have that market dynamism because we know that ultimately the growing sectors in the economy from decade to decade tend to be those where there’s new entrants coming in and challenging the established firms.
You know, one of the odd things about Australia is if you look at the biggest five firms on the share market four out of five were there in 1985. That’s not true of the US; they’ve completely turned over their top five firms on the share market in that period. But then in Australia there’s tended to be a lot of lock-in of incumbents.
KARALEE KATSAMBANIS: Dr Leigh, look, we are in worrying economic times at the moment. You know, last Tuesday it was a bit brighter – the RBA paused interest rates. Economists are still a bit divided over what will happen next month and, you know, whether there’ll be cuts before the end of the year or next year. Dr Philip Lowe thinks that it’s still a bit of a narrow path to get to a soft landing. Are you confident that we’ll get there?
ANDREW LEIGH: Look, I really hope we will. We’ve – the advice we’ve had from Treasury and the Reserve Bank suggests that Australia should avoid recession. You can never be absolutely sure on that, but that’s the advice we’re getting. And the advice is also that inflation is likely to have past its peak. You’ve got the great situation in Western Australia where it’s the only state which has more job vacancies than people who are unemployed. And so having a low unemployment rate is really fundamental to putting pressure on getting – on people getting a decent wage rise and also to ensuring that people get a look‑in in the economy who mightn’t have otherwise so you get people who are disadvantaged, who perhaps don’t have a typical CV, getting a job interview in a tight labour market which they wouldn’t get if the unemployment rate was higher. That’s a good thing; we’ve just got to keep it that way.
KARALEE KATSAMBANIS: Dr Leigh, of course, one of the best fixes for inflation is a decrease in government spending or the raising of taxes. You are a popular government. You’ve just gained a seat at the Aston by-election recently. Surely, it’s a good time to spend a little bit of political capital and sort of start that conversation in the lead-up to the budget?
ANDREW LEIGH: Well, last budget Jim Chalmers banked 99 per cent of the revenue upgrades over the first two years, which is unprecedented, compared to previous governments which basically spent the revenue upgrades. We’re really aware that fiscal restraint is an important part of what we need to do as a federal government and that the house cost-of-living relief we’re providing needs to be targeted. So, people will see coming in the middle of this year our cheaper childcare promises and cheaper medicines promises flowing through. We’re also working to boost the supply of housing, and there’ll be energy bill relief as the cost-of-living centrepiece of the budget Jim Chalmers –
KARALEE KATSAMBANIS: I think a lot of people might be wanting those tax cuts to be upheld. We’ve had a lot of callers that have queried why was it sort of just mortgage holders, estimated to be around about 30 per cent of the population, that was sort of slugged with fixing the inflation problem. A lot of them have wanted to know that why doesn’t the government look at raising the GST as an option. Has that come up at all in discussion?
ANDREW LEIGH: No, we won’t be raising the GST. And the crocodile tears that the Liberals are crying over the lower- and middle-income tax offset are just that. I mean, this was a temporary measure which was organised by the previous government to be time limited, and, you know, that’s scheduled to finish up.
We’re targeting our cost-of-living relief. That energy bill relief I think will be warmly welcomed by many of your listeners. I just shook my head to be in the federal parliament and to see the Liberals voting against the energy bill relief that we’ll be providing in conjunction with states and territories.
KARALEE KATSAMBANIS: But you’d have to say there’s a lot of middle-income earners now that are just – you know, whether they relied on that or not, they sort of feel fairly hard done by. I guess at the end of the day it’s politics and there’ll be another issue that will come up and we’ll just see where it all goes with the budget.
Dr Leigh, one thing I wanted to ask you is one of your government’s key pledges was to crack down on multinational tax avoidance. You’ve just held a roundtable on the issue. What came out of that discussion?
ANDREW LEIGH: Yeah, I’m really glad you asked about that, Karalee. What we did at the election was we promised we’d close two significant loopholes – one which allows firms to use debt to shift profits offshore and another which allows them to use royalty payments to shift profits offshore.
In closing these loopholes we’re moving with other advanced nations, taking advice from the OECD, which has been looking at some of the contrivances that firms engage in to avoid paying their fair share of tax.
We do two things when we crack down on multinational tax avoidance – firstly, we add money to the budget in order to pay things like the energy bill relief that I mentioned before but, secondly, we create a level playing field. We ensure that a small business based in Perth isn’t competing with one hand tied behind its back against a multinational that’s stashing profits in the Cayman Islands. We ensure that level playing field and then firms are competing based on offering the best product or service, not on identifying the cleverest tax loophole.
KARALEE KATSAMBANIS: Dr Leigh, you’ve been in your role for almost one year now. I had the pleasure of getting to know you in the last couple of years. I know that you work incredibly hard, and you champion many issues. I have to ask you while I’ve got you here tonight: has it been tougher than you first thought it would be?
ANDREW LEIGH: It’s always a privilege to be in government, Karalee. And it’s one of those things where you wake up each morning and you think this is why I got into politics; not in order to fight with people, but in order to put in place good reforms for the interests of the country. We didn’t choose the circumstances. Obviously, the war in Ukraine makes things tough, the inflation pressures that are coming through is a central economic challenge that we have. But every opportunity we have to make lives better for ordinary Australians, that’s a pleasure and a real privilege every day in the job.
KARALEE KATSAMBANIS: Well, Dr Andrew Leigh, Assistant Minister for Competition, Charities and Treasury, I want to thank you very much for your time this evening on the Nine Radio Network for Radio 6PR’s Money News.
ANDREW LEIGH: Pleasure to chat, Karalee. Thanks again.
KARALEE KATSAMBANIS: And there we go, Dr Andrew Leigh.