PARLIAMENT HOUSE, CANBERRA
WEDNESDAY, 16 SEPTEMBER 2015
SUBJECT/S: Joe Hockey’s uncosted multinational tax plan; tax transparency; effects test.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks everyone for coming along today. Multinational tax avoidance has been a big issue in the Australian public eye this year. We know that many Australian firms and individuals do the right thing and pay their taxes. So they are justifiably outraged when they see reports about big multinationals not paying their fair share of tax. Today we saw Joe Hockey, after two years of bluff and bluster, announce a multinational package into the Parliament. It was a package so vague that his own Treasury can't cost it. Here's what the budget measure looked like in the budget: it's just a series of asterisks. No revenue estimates are attached to Mr Hockey's multinational tax package.
We know that Mr Hockey is getting towards the end of his ministerial career. Today's move is a bit like Marty McFly in 'Back to the Future III', hoping that if he drives the train fast enough, he'll be able to jump the chasm. If Bill Shorten and I had stood in front of you and said that we had a Labor plan but we couldn't tell you how much revenue it would raise, you would rightly laugh at us. But Labor hasn't done that. Labor's plan is costed. Labor's plan is inspired by work done by the OECD; it is costed by the Parliamentary Budget Office; and it raises $7.2 billion over the course of the next decade. Crucially, it deals with the issue of debt deductions, which Mr Hockey's package won't touch. Now, we've never said that our package is the be-all and end-all of multinational tax avoidance. But Mr Hockey needs to work with Labor and announce that he will put our package into law as well. And if it's not Mr Hockey in the job, his successor needs to take the same approach.
We also need a government that isn't restricting tax transparency, but is expanding it. In 2013 Labor introduced laws to require tax transparency for big firms. It means they must report total income and tax paid for firms earning over $100 million. Mr Hockey is in Parliament at the moment trying to wind back those laws. He's trying to take half of the firms out of that net. That's exactly the wrong approach. Australia doesn't need more tax secrecy for big firms; we need more transparency.
Finally, can I just say a few words about the effects test. Mr Turnbull has made a lot of his claims to economic leadership. But if he wants to do better on that front, he needs to be absolutely clear that he is not going to introduce an effects test. That he won't bow to the demands of the National Party and Bruce Billson to introduce a measure that was recommended against by 10 of the last 12 competition inquires. An effects test would create considerable uncertainty for business, and that is why a number of respected business groups have come out so firmly against it.
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