THOMAS ORITI, HOST: First this half hour, the multinational mining giant Rio Tinto has settled a decade long tax dispute with the Australian Tax Office. It’s handed over almost a billion dollars in unpaid taxes after an investigation of its Singapore marketing hub. The settlement’s one of the largest in Australian tax history, with the mining giant following in the path of other multinationals forced to pay up. Let's get more on this now. We're joined by the Assistant Minister for Competition, Charities and Treasury Andrew Leigh. Andrew, good morning to you.
ANDREW LEIGH, ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY: Morning, Tom. Great to be with you.
ORITI: Thanks for joining us. So we've heard from the CFO of Rio Tinto, Peter Cunningham. He's released a statement saying, this is a quote firstly, ‘we are glad to have resolved these long standing disputes and to have gained certainty over future tax outcomes relating to our Singapore marketing arrangements’. What's your view of this outcome of this settlement?
LEIGH: I think it's excellent news for taxpayers, and a great credit to the work of Australian Tax Office officials. The issue of resources firms using marketing hubs was really brought out by the Senate corporate tax inquiry and questions from Labor senators about seven years ago. We then saw a settlement with BHP for half a billion dollars, and this one now with Rio for a billion dollars. And what's really important about this settlement, Tom, is that it ensures that tax on Australian commodities extracted from Australia and sold overseas will be paid in Australia. You wouldn't have thought that's a controversial topic, but that's where we've settled here and I think it's really important for tax certainty on this arrangement. But it does point to the broader issue of corporate tax avoidance and the fact that we have multinational profit shifting running rampant along a whole range of different firms, which is why Labor took some strong plans to tackle multinational tax avoidance to the last election.
ORITI: Yes. So I mean, when we look at this ‑ complicated for us to get our heads around in such a short time ‑ but you know, Rio Tinto hid about five years ago with these big tax bills a marketing hub in Singapore selling iron ore and aluminium on behalf of the group. In fact, I think the bills date back to 2010, so 12 years ago. But just looking at that theme more broadly ‑ multinational tax loopholes ‑ what is the Labor government doing to close in on them?
LEIGH: The policies we took to the last election, Tom, were around tightening two forms of profit shifting. One is the abuse of royalties, and the other is the abuse of debt deductions. And both of them aim to do a simple thing, which is to reduce the corporate tax payable in Australia by moving profits to low or no tax jurisdictions. It’s come by some fancy names. Apple's tricks in the past have been called Leprechaun Economics. Microsoft was called a Single Malt. Google and Facebook used to trick called the Double Irish with a Dutch sandwich. So fancy names, fancy accounting, but the bottom line is that corporations aren't paying their fair share of tax in Australia, and Labor wants that to change.
ORITI: It's like a whiskey industry rather than their tax loopholes. [laughter]
ORITI: $1 billion though now paid, where does that money go?
LEIGH: It'll go to social services. It'll go to ensuring that Australians don't have to pay as much tax. It will go to paying down debt. It's an important recognition of the hard work the Tax Office officials have done. They've worked diligently over many years in order to secure this settlement, but we need to make sure that they have strong laws. The Tax Office can only do what the laws enable it to do, which is why Labor's committed to speedy implementation of the OECD/G20 Two Pillar Agreement. 130 plus countries came together last year to strike that important deal, but now we've got to get that into domestic legislation. And also to closing those multinational tax loopholes that I talked about before. Because, Tom, paying tax can't just be an optional extra for companies. It's part of their social licence to operate.
ORITI: So a billion dollars and some challenges ahead, as you say. It seems like a lot of money. It's not though when we look at the broader economic outlook and I know from the Treasurer, Jim Chalmers, he said he'll deliver a confronting ministerial statement on the budget outlook, a week from today actually. Can you give us a sense of the road ahead? I mean, how much worse could things get?
LEIGH: You're right, Tom. You'd need 1000 of these judgments in order to finally pay off the trillion dollars of debt left to us by the Liberals. So there's certainly a mountain of work to be done there. Jim will be talking about the importance of the quality of spending, and some of the economic challenges that face us ‑ the big surge in inflation that we've seen, the challenges in ensuring that Australians don't have prices rising faster than their pay packets, the importance of secure work, particularly in the gig economy where we're seeing people try and make an end run around important labour rules. Labor wants to ensure a level playing field for business, and part of what we're doing in multinational tax avoidance is making sure that a small firm isn't disadvantaged by going up against a tax dodging multinational. It's good economics to close multinational tax loopholes.
ORITI: The economic hardship continues, not only in terms of prospects for the government and the bottom line, but also for so many Australians with COVID, who were forced to isolate without sick leave. And we have reported they'll again be able to claim up to $750 in these hardship payments. The government's accused of back flipping by making those payments available again. But just beyond that toing and froing, how long will those payments actually be available for at this stage?
LEIGH: The former government had scheduled those to end on the 30th of June. We've now pushed that date out to the 30th of September. That ensures that people who don't have liquid assets and who are having to stay home, once you've exhausted your sick leave, you've got a payment that you can access. That's going to be really important for low wage workers in the hospitality industry, for example. We want those workers to isolate. The last thing you want is someone with COVID feeling that they need to go into a job, particularly a job where they're interacting with a lot of other people. It's going to be a tough period over the coming weeks. We've got the COVID wave cresting, and we need to make sure that we're all doing our part. And so government's doing its part, but I'd urge any of your listeners who are eligible for another booster, go out there and get that booster. It will protect you and your family, but it will protect the community too.
ORITI: The COVID wave cresting, as you say. You know, we've been with a number of health experts on the program over the past week or so. They are all warning, you know, this COVID situation, it's going to get worse. The peak of the current wave’s still a few weeks away, but it's not going to be the last we hear about COVID‑19 either. I don't think anyone's in any denial about that. I mean, economically speaking, does the government need to re‑evaluate how it looks at COVID? You mentioned that September deadline for these hardship payments. But will there always need to be some sort of economic support for people doing it tough during these times?
LEIGH: It's clear, Tom, that it's changed the country far more than any of us would have imagined a couple of years ago when COVID first came upon us. And we’re needing to adjust the way in which we live our lives. From the point of view of the federal government, we've extended support to hospitals, expanded access to fourth doses, expanded access to those antiviral medicines for eligible recipients and improved the information campaign. All of those are critical initiatives to make sure that we minimise the cost of COVID. But we can't get it down to zero. You know, this is having a significant toll across the community, particularly among older Australians, particularly among unvaccinated people.
ORITI: I just want to ask you about a couple more things while we've got you there, Andrew Leigh. The Reserve Bank ‑ a three member panel will conduct a broad review of the Reserve Bank, including the RBA’s objectives, the interaction of monetary and fiscal policy. What should Australians hope to get out of this review?
LEIGH: A better and stronger Reserve Bank. The Reserve Bank has served Australia well, but most of its international counterparts have been reviewed in this century. It's unusual to have a reserve bank that hasn't faced a review. And so Jim Chalmers has commissioned an expert panel to look very carefully at the Reserve Bank and see how it can do better. And that'll go to its inflation targeting, it'll go to its personnel, it'll go to the way in which it manages itself. I've been on the House Economics Committee for the last few years, questioning the Reserve Bank and holding them to account in that public forum. I think this review will go much broader and deeper than that in order to improve a strong institution.
ORITI: And look, just finally, the federal government's released its agenda ahead of the new parliament sitting for the first time next week. Aged care, some reforms we're hearing about there. 43 per cent emissions reduction target as well. Labor's now officially in power. What are you looking forward to?
LEIGH: I find it just a real privilege and a pleasure, Tom, to get up each morning and be able to work on initiatives that make a difference for the community. In my area of charities, we've ended the former government's war on charities and are looking to partner with the community sector in order to build a more reconnected Australia. In the economic realm, the whole economic team is focused on ensuring that we've laid the foundations for productivity growth, which has been lousy in the past decade. And of course, climate change, we've finally ended the climate wars and set that 43 per cent target, built up based on the science and the economics in order to decarbonise the economy while ensuring we still get that productivity growth at the same time.
ORITI: I'm afraid we're out of time, but thank you very much for joining us. Appreciate it.
LEIGH: Always a pleasure, Tom. Thank you.