PARLIAMENT HOUSE, CANBERRA
THURSDAY, 15 OCTOBER 2015
SUBJECT/S: Malcolm Turnbull’s Cayman Island portfolio
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning everyone. We've been debating in the Parliament a number of important issues that go to multinational taxation. Labor has been calling for all companies with income over $100 million to have their tax affairs disclosed. That's their total income, taxable income and tax paid. The Coalition is trying to take half of those companies out of the transparency net and keep their tax affairs secret. Labor has been putting on the table a serious package that will crack down on multinational tax avoidance and add more than $7 billion to the budget bottom line. The Coalition isn't willing to close these debt deduction loopholes.
In that context, I think many Australians will find it unusual that the Prime Minister is investing in vulture funds in the Cayman Islands. The Cayman Islands have been on the radar of the OECD and tax authorities around the world as a notorious tax haven. Australia's tax commissioner has referred to it as a tax haven and Malcolm Turnbull's decision to invest in a number of Cayman Islands-based funds does call into question how serious he is able to be about cracking down on multinational tax avoidance – which is a serious issue for the Australian budget – and tax fairness. Happy to take questions.
JOURNALIST: It seems that both Bill Shorten and Sam Dastyari have invested in funds in tax havens – are you concerned about their tax arrangements?
LEIGH: There is a world of difference between putting a bit of money into your superannuation fund and making an active decision to go into a vulture fund based in the Cayman Islands with a minimum $1 million buy-in. The decision to invest in the Cayman Islands is a decision that Mitt Romney made prior to the 2008 Presidential campaign. You now see Malcolm Turnbull coming up with the same arguments that Mitt Romney made then. If Malcolm Turnbull would like the Australian people to believe that the only reason he put his money in the Cayman Islands was to maximise his Australian tax then I've got a Treasury mole who might like to tell you some things.
JOURNALIST: What do you say to Malcolm Turnbull's argument that he purposely invested in managed funds overseas to avoid any conflicts of interest here?
LEIGH: There are plenty of ways of investing in Australia and avoiding conflicts of interest. One can invest in real property, or you might put your money into an index fund, which simply buys you a slice of the Australian stock market. The notion that you have to buy into a Cayman Islands vulture fund in order to avoid conflicts of interest is frankly laughable.
LEIGH: Labor takes seriously any breach of laws and they should be referred to the relevant authorities. But I think all Australians now recognise that what's going on in this Royal Commission is a heavily partisan exercise. We don't intend to dignify it by providing a day-to-day running commentary.
JOURNALIST: Just on the Cayman Islands stuff, if you're not willing to put forward any claim of impropriety, isn't this just a smear campaign?
LEIGH: I think it does go to the seriousness of the Prime Minister, and his Government when it comes to tackling multinational profit shifting. If you're not willing to keep the transparency laws that Labor put in place; if you're not willing to close the debt deductions loopholes that Labor has carefully costed through the Parliamentary Budget Office, and then at the same time you're investing in one of the world's worst tax havens, then Australians will reasonably be asking questions of Malcolm Turnbull as Americans did of Mitt Romney over the same affairs.
JOURNALIST: What are your concerns though, if he says all of the income is taxed in Australia?
LEIGH: The key question is the ways in which Caymans based funds are able to effectively minimise the total tax bill. By moving between dividend and capital gains classifications; through differential treatment of management fees; through deferring a tax bill until it is more advantageous for the taxpayer. One of the questions Malcolm Turnbull didn't answer in Parliament yesterday was whether the income derived from the funds was higher than it would have been had they not been based in the Cayman Islands. Frankly, it's hard to see why else you'd be investing in a place that has more companies than it has people.
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