THE LIBERALS' SOFT TOUCH ON MULTINATIONAL TAX DODGING
HOUSE OF REPRESENTATIVE
WEDNESDAY, 11 AUGUST 2021
Before question time, I spoke about the absurdity of the situation of Jan, who had received a notice requiring that she repay some $1,000 of the pension because she had received JobKeeper in her capacity as a part-time schoolteacher in Victoria. While the government is going hard after Jan, putting her on a $15-a-fortnight repayment plan, it has nothing to say to Gerry Harvey, to Solomon Lew, to Brett Blundy, to the other Australian billionaires who've gotten JobKeeper as a result of having significant shareholdings in firms that enjoyed a profitable year and paid a dividend. That's the double standard that we have in this government, a standard that says that Jan, who is on the pension, should have to pay $1,000 back through a repayment plan but that the billionaires who've benefited from JobKeeper aren't asked by this government to repay a cent. When we on this side of the House call on the government to at least exert a bit of moral courage and at least ask these firms to live up to their corporate social responsibility statements, we get told by the Prime Minister that we're playing ‘the politics of envy’. That's how out of touch this Prime Minister is—that he is willing to go after Jan but not to go after Australian billionaires.
We see again with this bill too little, too late being done on multinational tax avoidance. This is a measure that will finally shut down offshore banking units. Good idea, that. In fact, it's an idea that Labor had in 2011 to 2013, when we cracked down on offshore banking units. But, when the coalition came to office, in the 2014 Mid-Year Economic and Fiscal Outlookthey deferred offshore banking unit changes, then costing the budget some $180 million a year. As I pointed out at the time, the effect of this was to slow the rate of economic growth in Australia. When you ask multinationals to pay a fair share of tax, that doesn't slow down Australia's economic growth rate. But when you cut payments to the most vulnerable, as the government has repeatedly done, then you're taking money out of the economy, because those at the bottom of the income distribution spend all they get.
It was in 2018 that the OECD Forum on Harmful Tax Practices determined that Australia's offshore banking unit regime was a harmful preferential tax regime, on the grounds that it provided a concessional tax rate and was ring-fenced to exclude domestic transactions from its scope. In other words, the concession was only available in relation to transactions between parties that are foreign residents.
As members would be well familiar with, the offshore banking unit regime is only available through the provision of banking services to offshore customers. It attracts a concessional 10 per cent tax rate in place of the usual 30 per cent company tax rate and an exemption from interest withholding tax for applicable offshore banking unit activity. As I said, Labor cracked down on this a decade ago. Yet when the Liberals came to office, the Abbott government wound back that crackdown on offshore banking units. The OECD said this is a harmful tax practice back in 2018, and yet it's taken the government three years to act.
What's happened to the cost of that tax break? As I said, back in 2014, it was $180 million a year. Now it's risen to $325 million a year. So it's grown from $180 million a year to $325 million a year. This is a harmful tax practice, but it's taken the Liberals far too long to shut it down. That's because they're always going soft on the powerful. When it comes to cracking down on tax havens, we had then Prime Minister Turnbull—remember the man who was happy to stand at the prime ministerial dispatch box and defend the use of tax havens?—say it was alright to have tax affairs being conducted through the Cayman Islands and the Bahamas.
Labor doesn't believe that. Labor does not support the use of tax havens, which is why we believe that we need to move not just behind the OECD but with the OECD in ensuring that the work being done on the base erosion and profit shifting project, the work being done to make sure that tax havens don't undercut the global tax system, is accelerated. But the Morrison government aren't interested in cracking down on tax havens. They're not interested in making sure multinationals pay their fair share, and it's taken them a decade to come to the party on shutting down offshore banking units. That's of a piece for the government, which have decided that they are perfectly happy giving billions of dollars to firms with rising earnings.
We now know that through the first three months of the JobKeeper program some $4.6 billion was given to firms whose earnings went up rather than down. If that's true over the entire scheme, we're talking about 15 per cent of the total JobKeeper spend going to firms with rising earnings. That would be some $13 billion, more than the Commonwealth spends on early child education in a year and more than the Commonwealth spends on public schools in a year. $13 billion is almost $1,000 for every Australian adult. It is enough money to deliver fibre to the premises National Broadband Network to every urban home and business in Australia.
Treasury said that there should be an evaluation of the JobKeeper program, and yet there is no evaluation being conducted as the Treasurer's own department recommended. If there were to be a review, there's no sign that it would actually be made public—that it would actually be given to the people who paid the bills for JobKeeper, JobKeeper that's gone to Harvey Norman and Premier Investments; JobKeeper that's gone to the Royal Sydney Golf Club and the Australian Club, the men's-only club in Sydney; and JobKeeper that's gone to the Great Barrier Reef Foundation, an organisation which doubled its revenue and received $444 million in public funds.
In tomorrow's Australian Financial Review commentator Joe Aston has belled the cat. He says of the Treasurer, 'He has misspent more public money than any elected official in the history of the Commonwealth.' They're the words that'll be on the back page of the Australian Financial Review tomorrow. Australia's financial newspaper of record says tomorrow of the Treasurer, 'He has misspent more public money than any elected official in the history of the Commonwealth.'
The mismanagement of JobKeeper is a national scandal. Never before has the Commonwealth run a program this big. Never before has the Commonwealth wasted so much public money. The cost per job per year is around $200,000. There's no bargain in that.