WEDNESDAY, 6 APRIL 2022
SUBJECTS: Engaged Egalitarianism and why the Australian recovery must prioritise openness; Labor’s plans to tackle multinational tax avoidance; Labor’s Powering Australia plan; Labor’s plan to ease the costs of living and support economic growth.
ROSS GREENWOOD, HOST: The Shadow Assistant Minister for Treasury Dr Andrew Leigh today laid out a plan to increase foreign investment into Australia as he delivered the Economic Society of Victoria's biennial Stan Kelly lecture. Andrew Leigh joins us now from Melbourne. Andrew, many thanks for your time, as always. Before we get to foreign investment, I want to go to Scott Morrison, who's in the Hunter Valley. We've just heard him only just in the last few minutes criticising Labor for not putting in a tax cap of 23.9 per cent as the government has, saying that effectively if you did not have a tax cap, this would mean Labor would continue to tax at higher levels and therefore hang on to more of the people's money. How do you respond to that?
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Scott Morrison's a desperate man who will say anything and do anything. The fact is that his tax to GDP ratio of 22.1 per cent is considerably higher than the tax to GDP ratio of 20.9 per cent of the previous Labor Government. This is the second highest taxing government in the post-war period, after only the Howard Government. So Scott Morrison has no leg to stand on when it comes to higher taxes-
GREENWOOD: So that's a no brainer for you and for Labor therefore - bring in your own tax cap, make it 22.9 per cent. You look like geniuses and as a result, therefore, if it goes above that you give the money back to the people. Great politics.
LEIGH: The challenge is if you want to get tough on multinationals, which is a core part of our plan, where we've said Ross that we believe that Australia is lagging behind other countries on taking action on multinational tax dodging. Two-fifths of multinational profits now go through tax havens, places like the Caymans and the Bahamas. And that's not just draining our tax revenue away, but it's also deeply unfair for Australian firms who aren't on a level playing field with tax dodgers-
GREENWOOD: But okay- I was gonna say, but didn't you give a speech on trying to attract more multinationals into Australia, foreign investment into Australia? But of course, if our tax rates are much much higher than overseas, that gives them the temptation to try and take their earnings elsewhere, the transfer price and all that type of thing, which again we should be cracking down on. I agree entirely with you about that. But what I'm trying to get to here is surely what you want is you want to at one stage try and attract more of that. That's what your whole speech today was about.
LEIGH: Ross, we're an attractive destination for foreign capital, as we should be. But we're not going to be attracting foreign capital by becoming the next Cayman Islands or Bahamas. We need to attract foreign capital because Australia is a great place to do business. And frankly, right now we've got business investment the worst it's been since the early 1990s recession. That's not me saying that - that's the Business Council Australia belling the cat on the problem that we've got with business investment-
GREENWOOD: I'm gonna jump in there and say to you, does that also mean that you would like to boost the amount of investment we're seeing Australia from China? Because that will be one of the arguments levelled at the Labor Party, that you're simply trying to get more Chinese investment into Australia at a time when clearly for national security reasons and because of our relationship with China that declined some 20 per cent in the last financial year.
LEIGH: Ross, you’re spot on with that. I think we've been over reliant on Chinese capital, not sufficiently diversified in the sources of foreign investment. One of the things that I've argued in the lecture is not that we should liberalise Australia's foreign investment rules, but that tightening them would come at a cost to wages and a cost to GDP. According to the Productivity Commission, it'd be taking hundreds of dollars out of pocket of a typical worker if we were too tighten. But I don't think we should liberalise, I’m just making a simple point that Australia's history is one of drawing significant foreign investment in and that Australian workers have been the chief beneficiaries of that, because it raises the capital to labour ratio and that means you've got greater potential to increase the productivity of Australian workers. At a time on Australian average wages have gone backwards $1300 in real terms just this last year, we need to be doing everything we can to tackle the wages crisis in Australia.
GREENWOOD: Okay, but that's a few other things that government can actually help with. Lower energy prices, because we are not competitive with the world on energy prices. Wages that are consistent with the rest of the world, because our wages are not competitive with many other parts of the world. Also red tape, which is terrible, which means planning approvals take years not months to actually go through. Is Labor going to address these things? These are big fundamental productivity changes for Australia.
LEIGH: We'll certainly address power prices, Ross. Our Powering Australia plan will drive down the cost of power for households by $275 by 2025, and it'll reduce the cost of power for Australian businesses. We’ll get more renewables into the grid, that’s zero marginal cost and that means cheaper power for Australian businesses. Our free TAFE program makes sure businesses have access to a better skilled workforce, and tens of thousands of additional university places also boosts productivity. Productivity has been going backwards on this government's watch, and that's just not good enough. Productivity, as you well know, is one of the core sources of wage growth in the long term. So while we've got to crack down on the inappropriate use of labour hire and temporary contracts in the public service, and put job security into the Fair Work Act as an explicit requirement, we've also got to do something about Australia's productivity crisis. That’ll be a huge priority for Anthony Albanese, Jim Chalmers and the Labor team.
GREENWOOD: Okay, I've got to leave it there. Andrew Leigh, many thanks for your time to the program today. We'll speak again shortly.
LEIGH: Thank you, Ross.
Authorised by Paul Erickson, ALP, Canberra.