Cost of Living
Matter of Public Importance
House of Representatives
9 November 2022
It is certainly true that in Australia we have a strong egalitarian ethos. Ours is a country where many people would prefer to sit in the front seat of a taxi, where we prefer to use the word 'mate' rather than 'sir', where we don't have private areas on the beaches and where most people don't stand up when the Prime Minister enters the room. Yet, over recent generations, we've seen a steady rise in inequality. As Thomas Piketty outlined in his book Capital in the Twenty-First Century, we've seen, across the advanced world, an increase in the share of the top one per cent of income earners. We've seen an increase in the share of the top 0.1 per cent of income earners, tripling since the early 1980s. We have seen CEO pay increase far faster than an average worker's pay. Work by Tomas Kennedy and Peter Siminski asks the pertinent question: for Australians born in successive generations, what's the chance that they earned more than their parents? For Australians born in the 1950s, 84 per cent earned more than their parents. For Australians born in the 1980s just 68 per cent earned more than their parents.
We've seen a fanning out of real wages since 1975. Since 1975, wages at the 10th percentile have grown in real terms by 33 per cent. Wages at the median have grown by 55 per cent. But wages at the 90th percentile have grown by 81 per cent. That is, earnings are growing nearly three times as fast for the highest paid as for the lowest paid. Work done by Treasury, which I highlighted in my recent Gruen lecture, shows that market concentration has risen. The biggest firms have a larger slice of the pie than they did in decades past. Mark-ups have increased -- the gap between what firms charge and their costs has grown. Under the former governments we saw the JobKeeper scheme funnel some $20 billion of taxpayer money to firms with rising revenues, some of which used that taxpayer money to pay executive bonuses.Read more
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.
Address to the Australian Government Solicitor Civil Regulation Conference
Wednesday, 2 November 2022
I acknowledge the Gadigal people, the Traditional Custodians of the land on which we meet, and pay my respects to their Elders past and present.
Congratulations to the Australian Government Solicitor (AGS) for getting this conference back up and running after some challenging years for events.
The best part of being Assistant Minister is that I get the opportunity to meet some amazingly dedicated people and this group is no exception.
With everyone here today, I want to acknowledge the mountain of work you do acting on behalf of the regulators.Read more
Crime and Punishment: Can we have less of both? - Speech - Australian Institute of Criminology Conference
Crime and punishment: can we have less of both?
Opening address, Australian Institute of Criminology Conference, Canberra
Monday, 31 October 2022
I begin by acknowledging the Ngunnawal people, the Traditional Custodians of the land we are meeting on. I acknowledge and respect their continuing culture and the contribution they make to the region, and I pay my respects to their Elders, past and present.
I would like to especially thank Aunty Jude Barlow for her warm Welcome to Country.Read more
Second Reading Speech - Aboriginal Land Grant (Jervis Bay Territory) Amendment (Strengthening Land and Governance Provisions) Bill 2022 - House of Representatives, 26 October 2022
Second Reading Speech
House of Representatives
26 October 2022
Aboriginal Land Grant (Jervis Bay Territory) Amendment (Strengthening Land and Governance Provisions) Bill 2022
The Wreck Bay Aboriginal community in the Jervis Bay Territory has an unusual status. It is part of my electorate of Fenner, but residents do not vote in state or territory elections. This means the Commonwealth has a particular responsibility to residents of Wreck Bay.
The Jervis Bay Territory is a special place. In a dozen visits, I have appreciated the chance to learn from and work with members of the community.
I thank my colleague Linda Burney, the Minister for Indigenous Australians, for allowing me to introduce this bill today on behalf of the Australian government.
The Australian government has worked with the Wreck Bay Aboriginal Community Council and the broader Wreck Bay community over a number of years to co-design the Aboriginal Land Grant (Jervis Bay Territory) Amendment (Strengthening Land and Governance Provisions) Bill 2022, with the most recent consultations on the detail of the bill in August this year. This bill will:
- strengthen the council's governance structures;
- enhance the control the council has over its own affairs; and
- help to enable homeownership style leases on Aboriginal land in the Jervis Bay Territory.
The Wreck Bay community is located in the Jervis Bay Territory, on the southern New South Wales coast, 126 kilometres east of Canberra. The Jervis Bay Territory was formally established in 1915, on the land of the Bherwerre Peninsula, through the enactment of the Jervis Bay Territory Acceptance Act 1915. First Nations people had been living in the area since long before that time, and never agreed to the surrender of these lands. Middens on the Bherwerre Peninsula provide evidence of thousands of generations of First Nations occupation of this area.Read more
Summing Up Speech - Treasury Laws Amendment (More Competition, Better Prices) - House of Representatives, 26 October 2022
Summing Up Speech
House of Representatives
26 October 2022
Treasury Laws Amendment (More Competition, Better Prices) Bill 2022
My thanks to the members who have contributed to this debate. I acknowledge the work of both Small Business Minister Julie Collins and Assistant Treasurer Stephen Jones on this bill. This bill delivers on an election commitment to protect Australian households and small businesses by banning unfair contract terms and increasing penalties for anticompetitive behaviour.
The Australian Labor Party has a long history of economic reform that builds a fairer and more resilient economy. Competition is an essential part of that for three key reasons. First, competition is about fairness. Without government action, monopolists can wield their power to rig the game in their favour rather than compete on even terms. Second, competition deals with cost-of-living pressures and makes our supply chains more resilient. Competition means businesses offer Australians the best prices they can. A diverse and dynamic economy, a resilient economy, helps to absorb, adapt and solve the challenges of an uncertain world. Third, competition is about jobs and skills. Competition helps to ensure that the most innovative, creative and savvy businesses are the ones that thrive. Those are the businesses that are best placed to offer jobs that are stable, secure and well paid. Competition also gives workers more options, empowering employees to negotiate pay and conditions that reflect their true value.Read more
A Zippier Economy: Lessons from the 1992 Hilmer Competition Reforms
University of Sydney
Monday, 17 October 2022
***CHECK AGAINST DELIVERY***
I acknowledge the Gadigal people, traditional custodians of the land on which we gather today, and pay my respects to their Elders past and present.
Thank you to Sydney Ideas, the University of Sydney’s flagship public talks program, for hosting me today. I welcome the students, members of staff and alumni attending this afternoon. Having spent six years earning a couple of degrees here, including a year editing Honi Soit, it’s good to be back.
Given the topic of today’s presentation – lessons from the 1993 Hilmer Review and the subsequent National Competition Policy reforms – it’s also my pleasure to acknowledge Professor Fred Hilmer, who has joined us today. It’s both exciting and daunting to have the subject of today’s talk in the audience.
As Professor Hilmer told me recently, the National Competition Policy reforms were big, bold and far-reaching.
He’s right in every respect – they’re regarded as among the most significant economic reforms in Australia’s history.
And we’re still talking about them 30 years later because they provide a powerful lesson for building a zippier economy.
Successful reform often looks deceptively easy afterwards.Read more
ABC CANBERRA MORNINGS WITH ROSS SOLLY
MONDAY, 17 OCTOBER 2022
SUBJECTS: BUDGET ANNOUNCEMENTS, COMPETITION, MEDICARE RORTS AND BULK BILLING IN THE ACT.
ROSS SOLLY: As you may have heard yesterday, the federal government announced – or let the cat out of the bag with some infrastructure spending that will be unveiled in the mini-budget which is coming up. Now, a lot of money being splashed around the place everywhere except unfortunately it seemed for the ACT. Now, later onin the day, the government said, “Don’t worry, there is some stuff coming your way,” but they wouldn’t say what it was. So, I mean, I’m not cynical and I’m not suggesting a conspiracy theory, but maybe we just got forgotten about for a little while. I don’t know.
Andrew Leigh is the Assistant Minister for Competition, Charities and Treasury, and he joins me this morning. Andrew Leigh, good to talk to you.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION AND TREASURY THE HOB DR ANDREW LEIGH: Great to talk to you, Ross. And sorry in advance – I won’t be able to spill the beans on the announcement that’s to come. But you can rest assured that with a Finance Minister from the ACT, the ACT is never forgotten in the Budget.
SOLLY: Well, that’s what I was a bit concerned about – how come everybody else got a little bit of the action yesterday and we were left sort of sitting on the subs bench waiting? The 90th minute came on, we still weren’t called on. We went into extra time – nothing happened. What happened?Read more
Tax and Government in the 21st Century
Parliament House, Canberra
Thursday, 6 October 2022
One of Florence’s great city-states is the walled city of Sienna. Home to the famous Palio di Siena, an annual spectacle described as ‘the world’s most insane horse race’, its city building shows on the wall a painting known as ‘The Allegory of Good and Bad Government’. Painted by Ambrogio Lorenzetti in 1338 and 1339, it shows a well-governed society – happy people, productive enterprises, strong communities; and a badly-governed one – crime, garbage and dysfunction.
Miranda Stewart has chosen for her cover image of Tax and Government in the 21st Century a segment of Lorenzetti’s fresco depicting good government. It underpins her central message – and one that the rulers of Siena knew in medieval times – that taxation is an integral part of a good society.
Tax and Government in the 21st Century takes a broad sweep, both in time and space. It begins with the origins of modern tax systems, and the way that taxation was expanded to cover public goods. As the Bismarckian welfare state grew, so too did a need to fund unemployment insurance, health insurance and pensions. Stewart’s history is impressive, but I couldn’t help feeling that she perhaps gave too little attention to the role of war in expanding tax systems. For example, Australia’s federal income tax was introduced in 1915 (to pay for World War I) and massively increased in 1942 (to pay for World War II).
Budgeting, Miranda Stewart notes, is fundamentally an ethical exercise. She discusses the growing emphasis in government budgets on analysing the impact of taxation and spending policies on gender and inequality, and discusses the rise of green budgeting. Fittingly, as Treasurer Jim Chalmers has noted, a major focus of the October 2022 budget will be on wellbeing, and measuring what matters.
Another trend that Stewart notes is the rise of fiscal rules. In 1990, she notes, less than ten countries had fiscal rules. In 2021, more than one hundred countries had fiscal rules. But rule-following is imperfect, to say the least. Stewart concludes that fiscal rules are ‘frequently honoured in the breach’, such as when the 2008-2009 global recession causes many countries to breach rigid budget rules. Troublingly, she suggests that a result of this episode was less budget transparency, as some countries engaged in ‘creative accounting’ to conceal the breach.Read more
3 October 2022
Last year, academics from the University at Albany and the University of Missouri published a research paper arguing that company taxes should be abolished. Part of their argument was that transfer pricing by multinationals has become so widespread that policymakers should give up on corporate taxation altogether.
It’s a stark reminder that when it comes to multinational tax reform, what’s at stake is nothing less than the future of the corporate tax itself. I believe it is good economics to save corporate tax, but it will take deft policymaking and proper tax administration to do so.
Company taxes go back a over a century. The US introduced a corporate tax in 1898, but it was over-ruled by their Supreme Court a year later. In 1913, after they had sorted out their constitutional issues, the US company tax rate was set at a measly 1 percent.
Australia introduced our company tax in 1915. Then Attorney General and future Prime Minister Billy Hughes told parliament that it was “necessary to meet the great and growing liabilities created by the war”. Hughes put the issue bluntly: “I know of no other means whereby we could raise the necessary revenue.”
Today, while the essential purpose of corporate income tax remains the same, the challenges of collecting corporate taxes have grown enormously. Part of that arises because company taxes are simpler in an economy that makes physical products. Agriculture, mining and manufacturing have clear locations of production. But if a company’s output is digital, then it’s easier to artificially shift the location of production to the place with the lowest tax rate.Read more