SENATE COURTYARD, PARLIAMENT HOUSE
THURSDAY, 3 NOVEMBER 2022
TOPICS: Multinational tax, ATO corporate tax transparency report, $5 note, energy prices, renewables, industrial relations laws
ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY DR ANDREW LEIGH: Thanks very much for coming along. My name is Andrew Leigh, the Assistant Minister for Competition, Charities and Treasury. Well, today we had the release of the Australian Tax Office’s Corporate Transparency Report. This is a report that is brought into the public domain as a result of laws passed under the Gillard Government, to the cries and objections from the Liberals at the time. It shows for 2,468 corporations, their tax that they've paid, their total income and their taxable income. It's really important that all firms pay their fair share of tax. And the Corporate Transparency Report is a Labor initiative that is delivering to Australians more information about tax paid. This is for the year 2020-2021. So it's not yesterday's information, but it is critical to corporate tax transparency.
Labor is strongly committed to making sure that all firms pay their fair share of tax. The recent budget, we funded the ATO's Tax Avoidance Task Force to the tune of $1.1 billion over the next four years to ensure that multinational firms don't get a leg up on their local competitors simply because they're exploiting unfair tax loopholes. We announced we'd be closing down a number of tax loopholes that have been exploited by multinationals. Multinationals will no longer be able to deduct as much debt as a result of our changes to the thin capitalisation regime. We've made changes to the ability of multinationals to use royalty payments inappropriately to minimise their tax bill. And we're expanding transparency for large corporations in Australia. For significant global entities - you can think of these as firms with revenue over a billion dollars - we're requiring country by country reporting detailed tax information, ensuring those firms are paying their fair share. For public companies, listed and unlisted, we'll require the number of their subsidiaries and the countries in which they're located. Again, a measure to ensure that we're not seeing taxes that should be paid in Australia, leaking away to low or no tax jurisdictions. Any firm that's tendering for a government tender worth more than $200,000 will have to disclose its country of tax domicile.
The Albanese government is strongly committed to a level playing field on tax, ensuring that firms are competing based on serving their customers well, being innovative and providing a good workplaces for their employees. The last thing we want is an economy in which firms are competing based on who's got the best tax loophole. That doesn't provide a stronger economy. That's not the foundation for the productivity growth that we know is vital. Very happy to take questions on the report or other economic issues.
JOURNALIST: Dr Leigh, when you are looking at that data were there any industries in particular that stood out as being poor at reporting their taxable income and paying their tax?
LEIGH: Well this information is coming from the ATO and so that's got full coverage right across industries. We're not focused on targeting particular industries. We're a pro-business government, keen to work constructively with corporate Australia. And part of that constructive cooperation involves ensuring that firms are paying their fair share of tax regardless of which industry they're in.
JOURNALIST: The government has promised to be upfront with the Australian people, to take responsibility when things go wrong. On energy prices, the modelling was from November 2021, when it came to this $275 dollar reduction. The war happened before the election and you still went to the election with that $275 commitment. Are you guys gonna stand by that $275 figure? Is that $275 figure out the window. You knew there was problems or rather, you said there was problems with the renewable energy investment before the election. Everything seemed to be on the table before then. Have you revised that $275?
LEIGH: What we know is that this is modelling that was for an outcome in three years time in 2025. So let's not get ahead of ourselves. We do know that renewables are the cheapest form of power. Australians who put solar PV on their roof, know intuitively, that the switch to renewables brings down the cost of power. And the more we move to renewables, the less dependent we are on the vagaries of the international energy market. You can see that just by looking at the jurisdiction, where we are here in the ACT. We're in the middle of the year, the electricity regulator announced that electricity prices will be going down 1.25% Because the ACT is 100% renewable, and therefore not subject to what's going on in the European gas market.
JOURNALIST: That $275 figure before the election, the government said it would take responsibility, yet no minister, not the Prime Minister, no one has mentioned $275. Since then, are you being upfront with the Australian people? Is it taking responsibility to not revise that figure or not?
LEIGH: We're being very upfront with the Australian people that renewables are cheaper than fossil fuel generated electricity. We're being upfront with the Australian people that this projection was for 2025, still three years away. So I don't think we need to be too concerned about this issue at the moment. Our main focus is on making the shift to renewables, getting more offshore wind, more solar, and a better joined-up grid, which we know is going to put downward pressure on power prices.
JOURNALIST: Dr Leigh, what's the process on deciding who goes on the $5 note? Do you have a personal view on who should go on? And would you care to respond to Peter Dutton, who accused you of rewriting history for saying it's not automatically the monarch?
LEIGH: It hasn't always been the monarch on the lowest denomination note. But it has in general been the case. We're having a considered conversation with the Reserve Bank and the Treasurer is leading that conversation. We're not in a rush to make a decision on this. We believe it's appropriate to take time to consult appropriately, and to make a considered decision.
JOURNALIST: Dr Leigh, there were reports this week that executives and public servants at Australia Post or NBN getting paid bonuses worth 10s of millions of dollars. How is that appropriate given the current economic climate?
LEIGH: And Minister Rowland has reached out to the agency to ask how they believe it is appropriate that these bonuses were paid. And we'll wait and see what they what they say to it. But certainly it raises an eyebrow or two in the current environment, with Australians seeing real wages now lower than they were a decade ago. When you observe these kinds of bonuses.
JOURNALIST: It's not the first time this has happened at Australia Post in particular, are they tone deaf to community expectations?
LEIGH: You're right, that it is a concern. And that's why the Minister has asked for an explanation.
JOURNALIST: There's 11 companies paying PRRT in the latest ATO report, I think it's $930 million, should taxpayers be getting more revenue for that product, given the international commodity surge that we're seeing?
LEIGH: Well, as you know, these are figures which are relating back to 2020-21. And so they precede some of the Ukraine-driven commodity price surge. But we'll be restarting work, which was started by the former Treasurer. And when I say the former Treasurer, I don't mean Scott Morrison who signed himself in secretly as Treasurer, I mean, Josh Frydenberg, who initiated work on the PRRT but then paused that work during COVID. Treasurer Chalmers has asked for that work to be restarted. And we'll have a look at what Treasury comes back with, in their estimation of what might be done on the PRRT.
JOURNALIST: Dr Leigh the distance between the total tax revenue in last year's report versus this year's report is about 11 billion. Of the top 10 tax payers, they have increased their tax payable by about 10.5. Huge increase in that top grouping, what does that tell us about the economy and who's paying tax? And also a significant portion of the tax is being paid by Australian mining companies. What does that tell us about the importance of the sector to the economy?
LEIGH: We've we've known for a long time that Australia has a pretty concentrated economy when it comes to where revenues are produced. This is in contrast with other economies, both in terms of the degree of market concentration, and the degree of stasis at the top of the share market. So if you go back to 1985, you see, of the five top firms in Australia today, four were among the top five back then. There's significant industry concentration and the estimates the Treasury has done is that industry concentration has increased. And naturally that then flows through to tax which is a function of revenues and profits. So I don't think it's surprising that we've got this high degree of concentration in the tax payable outcomes. But it's a feature of a fairly concentrated economy. [Starts to rain more heavily] I apologise also: I thought that the Mural Hall would too dank a venue, and we'd enjoy a beautiful Canberra sunny day. My forecasting powers are clearly not ideal when it comes to weather.
JOURNALIST: Do you think that Australians who are sceptical about the amount of corporate tax paid in Australia and the number of companies who pay no corporate income tax should be reassured by these figures?
LEIGH: I think Australian should be reassured that they have a government which is closing tax loopholes and improving tax transparency. That is part of the budget, we made sure that we got more revenue from multinationals who had been exploiting loopholes that we didn't think were fair, and which aren't being used by the typical Aussie small business. Ensuring that we've got more transparency for significant global entities, more transparency for public companies, more transparency for government tenderers. The Albanese government believes in tax transparency. Sunlight is the best disinfectant. It is vital to ensure that we've got optimal information out there on who's paying tax and who isn't.
JOURNALIST: When more than 40% of the income tax is being paid by mining companies who account for less than 2% of the employment market. Is there discussion that needs to be had around how that influences the broader wages debate we're talking about? There's lots of conversation out there about people being angry about seeing extreme profits, but also not seeing increases in wages that they're necessarily happy with. But we are seeing massive concentration of those profits in one sector that's a small employer. What's the solution to that?
LEIGH: Mining is a capital-intensive industry, probably the most capital-intensive industry in the country. So in some sense, it's not surprising that it accounts for a larger share of profits then it does of the wages bill. But on the broader question of wages, yes, we've got to get wages going again. We were elected with a mandate to get wages going. We're strongly committed to ensuring that real wages rise, the first decision of the Albanese cabinet was to make a submission to the Fair Work Commission backing a $1 pay increase for the lowest paid workers in Australia. And extraordinarily, the Coalition wouldn't join us in that call. But Minister Burke has been very clear and the bill that he's been working on getting through Parliament, that we want to get real wages going again. Australians who come up to me at my street stalls and contact me online, make very clear, they want to see real wages rising.
JOURNALIST: On the industrial relations Bill, will the government gag debate or allow public scrutiny of the bill?
LEIGH: We'll have constructive conversations with crossbenchers over this. It's a really important issue for so many Australians. We went to the election saying we wanted to get real wages going again, saying that we wanted to close the gender pay gap, saying that we wanted more flexibility for Australians who want to combine work with caring duties. None of those should be controversial propositions. We should have every one of the 227 parliamentarians in this building backing real wage growth, closing the gender pay gap, and more flexible work for people who need it. And that's what's in the bill. So we'll engage constructively and positively with unions, business and crossbenchers. But we're not going to compromise on the core principles that we took to the election. And won a mandate for.
JOURNALIST: Will you split the Bill? And will you consider putting as David Pocock says some of the more non controversial elements such as amendments around the Fair Work Commission before Christmas, and then allow for further scrutiny when it comes to multipoint bargaining, more flexible work hours?
LEIGH: Australians have waited a decade for real wage growth. They've suffered under a Coalition government that said that cutting real wages was a deliberate design feature of their economic architecture. Australians are pleased now to have a government that is committed to real wage growth. And we do need to make that a priority. So we're not minded to delay a day longer than is necessary on this important bill.
No other questions? Thanks everyone. I appreciate you coming out.