Ireland acts on multinational tax loopholes - will Australia?

The Irish Government is making great progress in tackling multinational tax avoidance; isn't it time our government did the same?



Joe Hockey’s inaction on corporate tax avoidance has been thrown into sharp relief by the Irish Government’s announcement that it is phasing out that country’s most notorious tax loophole.

This week Irish Finance Minister Michael Noonan announced that Ireland would put a stop to ‘Double Irish Dutch sandwich’ tax arrangements.

These complex arrangements involve companies transferring money between subsidiaries registered in Ireland and European Union countries such as the Netherlands.  

Multinational companies have taken a big bite out of the Double Irish Dutch sandwich in the past, with one major technology firm alone reportedly using the loophole to avoid $3.4 billion in tax since 2007.

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The Harper review sets the right course

One of the hottest topics in my shadow portfolios at the moment is the Harper review of competition policy. It's the first time Australia has taken an in-depth look at competition issues since the Hilmer review of the 1980s, and the recently-released interim report has a lot of interesting things to say about how we can make competition work for Australian consumers.I've jotted down some thoughts on what the report's strengths and weaknesses are in an opinion piece for Business Spectator.

Harper review sets the right course, Business Spectator, 16 October

When the Whitlam Labor government introduced the Trade Practices Act in 1974, it chose to do something rather novel for the time. It put consumers front and centre in the discussion.

Whitlam and his Attorney-General, Lionel Murphy, believed that the ultimate goal of competition was to make goods and services more accessible for Australian consumers. The old days of regulation as a protection racket for inefficient firms and near-monopolies were over

Through further competition reforms under the Hawke and Keating governments, the first question and fundamental test remained the same: how can policy reform help families doing their weekly grocery shop or paying their utility bills get a better deal?

This emphasis on consumers is a welcome feature of the interim report from the Competition Policy Review panel led by Professor Ian Harper. The panel has taken the view that competition policy should strive to make markets work in the long-term interests of Australia’s shoppers, users and buyers.

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Senate's corporate tax inquiry is underway

During the last sitting of Parliament, the Senate voted to establish an inquiry into corporate tax avoidance and multinational profit shifting. The Senate's Economics Committee has now kicked off work on this; you can make a submission any time until 2 February 2015.



The Senate inquiry into corporate tax avoidance has kicked off today by asking 40 ASX-listed companies to explain the taxes they pay.

This week, committee chairman Senator Sam Dastyari has written to a range of major firms which have been alleged to pay as little as 10 cents in the dollar on their local earnings.

They have been asked to explain why their effective tax rate is so far below the 30 per cent company tax rate paid by other Australian firms.

Shadow Assistant Treasurer Andrew Leigh said cracking down on corporate tax avoidance is fundamentally about creating a level playing field for all Australian businesses.

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ABC Political Panel - Monday, 13 October

I kicked off the week by joining Phillip Clarke and Senator Zed Seselja on 666 ABC's Political Panel. Here's the transcript:





SUBJECT/S: ACOSS poverty report; national curriculum; national security legislation

PHILIP CLARK: Welcome to our federal political panel. Senator Zed Seselja, ACT Liberal Senator joins me in the studio. Morning Zed.


CLARK: And Andrew Leigh, the Labor member for Fraser and Shadow Assistant Treasurer here in the studio as well. How are you?


CLARK: Just back on that ACOSS report – it’s not good news, is it? It suggests that on the trendline, poverty in Australia is increasing. Something like two-and-a-half million people, 1 in 6 children, are struggling to fulfil basic needs. One third of children in single parent households live below the poverty line, more than 600,000 children in total. We're heading, as ACOSS suggests, in the wrong direction. What are we doing wrong, Senator?

SESELJA: Well look, I'm still getting across these figures, these I think are 2012 figures. But I think it's always concerning if we're seeing Australians who are doing it tough. We want to have a range of policies that will help people to get out of poverty, help people to better themselves, give them the safety need they need. But fundamentally, to encourage people to have productive work if that's possible, and where that's not possible, to get whatever kind of assistance they can. These are challenging areas of policy; this isn't an issue for one government or one side of politics.

CLARK: Of course not, but it seems to suggest things are getting worse not better?

SESELJA: I think it often depends, and without going into all the detail that I haven't pursued yet, it often depends on exactly how you look at the various figures. I think that there's no doubt that many Australians are doing it tough. And we don't want to see that. We want to see people improving their life, we want to see people at least having the basics of life and certainly going well beyond that where it is possible.

CLARK: There seem to be two things here, Andrew Leigh: there's income support – and in that sense I mean the welfare system – and there's also the issue of whether our economy is being resilient and flexible enough to provide jobs for people. After all, for most people, a job is the difference between poverty and being able to meet your bills. Most people are a month away from poverty in that sense.

LEIGH: You're right about that Philip, it's more true in Australia than most developed countries. Unemployment is a reasonable predictor of poverty in most countries but especially so in Australia. We do a better job than many developed countries in ensuring that we don't have a working poor. Over the last generation we've seen a rising gap between battlers and billionaires and this is seen in the data on relative poverty. So just as the gap between the middle and the top distribution has increased, so the gap between the middle and the bottom distribution has increased as well. I'm really concerned about it and particularly in the context in which we've had a budget brought down which is redistributing resources from the most vulnerable to the most affluent. There’s been a whole host of cuts to supports for the vulnerable but then giveaways for those at the top, such as a gold-plated parental leave scheme. This report really comes at an important time for Australia. We’re at a crossroad on inequality, and we have to work out whether we stay true to our egalitarian traditions.

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Government has an obligation to society's unlucky

The government might prefer talking about issues other than the budget, but we can't let them off the hook that easily. In today's Hobart Mercury, I've taken a look at how two particular budget measures favour the lucky at the expense of creating opportunity for all.

Government has an obligation to society's unlucky, Hobart Mercury, 13 October

In the pantheon of Australian sport, no-one sits higher than Don Bradman. Like Babe Ruth in baseball and Wayne Gretzky in ice hockey, Bradman dominated cricket like no other player.

And yet, even for Bradman, luck played a role.

In international cricket, half of all batsmen make their debut at home, and half abroad. That means half get to play their first international test on a familiar wicket, while the other half must confront an unknown one.

That difference matters: a cricketer who makes his debut at home averages one-third more runs than one who happens to play his first match overseas.  What’s more, the scoring differential is persistent: a batsman who debuts at home will go on to have a career batting average that is one-fifth larger than a player who walks out on a foreign wicket. 

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ABS turbulence comes from Treasurer's neglect

A lot of Australia's economic and financial forecasting relies on data from the Australian Bureau of Statistics. So it's worrying to see what's happening at the bureau under Joe Hockey's watch.



The troubles at the Australian Bureau of Statistics are a direct result of the Abbott Government’s decision to hack millions from its budget, while also leaving the bureau languishing without a permanent head for almost a year now.

Comparing the Coalition’s May budget with Labor’s 2013-14 numbers shows it has slashed the bureau’s funding by $62 million over the next four years. 

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Foreign aid cuts are counter to Australian generosity

It's really disappointing to hear that the Abbott Government is considering making further cuts to Australia's aid budget after already slashing $7.6 billion from it in the May budget. The government's approach is especially galling when there's clear evidence Australians support foreign aid and want to see us do our bit in the region.

Foreign aid cuts are counter to Australian generosity, Canberra Times, 8 October

In the beachside town of Tibar, in Timor-Leste’s Liquiçá District, there is a little community school where local children come each day to learn reading and writing. For a long time, the school’s staff taught only from a couple of outdated textbooks, while the children ground stubs of chalk down to nothing writing on battered slates.

That changed in 2010 when an Australian Government aid program began providing Tibar’s school with brand new textbooks, reading tools and learning materials. For the first time, the school could offer its students an education that fed and inspired their young minds.

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2UE Mornings - More on multinational tax

Multinational tax avoidance continues to be a hot topic of discussion across Australia, and this morning I joined John Stanley and Garry Linell on 2UE Mornings to talk about how we can tackle this challenge. Here's the transcript:





SUBJECT/S: Joe Hockey dragging his feet on multinational profit-shifting; New Senate inquiry

JOHN STANLEY: This is the question that we have been talking about for quite some time. This question of tax and the capacity of the Australian government to get some of these companies, particularly these big companies like Apple and Google to pay their tax.

GARRY LINELL: So we’ve got the big G2O meeting in Brisbane coming up later this year and the Abbott Government has pledged to tackle the issue there.  But there are now even more concerns that the Australian tax office is ill equipped to deal with the problems. I mean if you look at the money that’s going missing, it could actually solve all of our budget deficits. Now they are currently in the process of axing about three thousand jobs at the Australian tax office, including most of the international tax experts. Now many of these experts are being poached to work for the big four accounting firms.

STANLEY: Can we just get this straight. We’ve got people, thousands of them who have been trained at public expense in our universities, they’ve gone into the public service, they’ve become tax experts, they work in the tax office, they’re laid off and then they go and work for the big companies that are helping these big international firms avoid their tax.

LINELL: But the best ones are being poached anyway, long before they are being laid off. They are being picked up by both the major companies who want to know how to minimise their tax and the big accounting firms.

STANLEY: Dr Andrew Leigh is the shadow assistant treasurer and he is one the line with us now.


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How can we make companies pay their fair share?

The Tax Justice Network and United Voice has just released new research showing many companies in the ASX 200 have an effective tax rate well below the Australian standard. I joined Jonathan Green on Radio National's Drive program to talk about how we can ensure that companies pay their fair share of tax. Here's the transcript:





SUBJECT/S: multinational profit shifting; corporate tax avoidance

JONATHAN GREEN: This may not come as a shock, but it seems that some of our biggest companies are paying the least amount of tax. The latest evidence comes in a report from the Tax Justice Network, and it’s a report supported by the United Voice union. Dr Andrew Leigh is the Shadow Assistant Treasurer and he joins me now, Dr Leigh – welcome.


GREEN: We all know that businesses try to minimise their tax, but this survey suggests that one third of top Australian companies pay less than 10 per cent. Is that extent a surprise?

LEIGH: Certainly there is a challenge with what's known as multinational profit shifting which a lot of developed countries are facing at the moment. It arises because increasingly a lot of production is being globalised and we're increasingly becoming a service economy. So it's easier for accountants to move the nominal country in which production takes place around to a low tax jurisdiction. A lot of countries are now working out how they can crack down on multinational profit shifting.

GREEN: So do we have particular vulnerabilities?

LEIGH: Australia – as a small, open economy – is particularly vulnerable to this. One of the things that Labor did last year, in our final year in office, was for Wayne Swan and David Bradbury to sit down and put together a multi-billion dollar package of measures to crack down on multinational profit shifting. What was disappointing to me was that when the Coalition came to office, they didn't say 'well, what's the next thing we can do beyond this?' Instead, they began to wind it back. So they shrunk the size of that package by $1 billion, effectively losing $1 billion of revenue which went back to multinationals in the form of extra tax breaks. 

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Cracking down on corporate tax - Sky AM Agenda, 29 September

With the release of a new report from the Tax Justice Network showing that some companies in the ASX200 have an effective tax rate of 10 per cent or less, I joined Sky's AM Agenda to talk about what we can do to tackle multinational tax avoidance. Here's the clip:


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.