PETER STEFANOVIC, HOST:
Rio Tinto has settled running disputes with the Australian Tax Office, agreeing to pay another lump sum. Almost a billion dollars has been paid, money the ATO claims the mining giant owed. Settlements include a dispute over whether the company should have deducted interest payments from money borrowed from itself to pay its UK arm and an argument over alleged transfer pricing through its controversial Singapore hub. Rio Tinto has paid 78 per cent of the total load. The ATO says it's a good outcome for the Australian tax system. And joining us live now is the Assistant Minister for Competition, Charities and Treasury, Andrew Leigh. Good morning, Andrew. Good to see you. That’s quite the amount to cough up.
ANDREW LEIGH, ASSISTANT MINISTER FOR COMPETITION, CHARITIES AND TREASURY:
It certainly is. And it's a testament to the corporate tax inquiry headed by Labor Senators in 2015, which first flagged the issue of marketing hubs. I think it was pretty odd that you have resources companies digging up resources in Australia, selling them to a second country, and yet the payments are being routed through a third country. Four years ago, BHP reached a half billion dollar settlement. And this billion dollar settlement from Rio doesn't just cover past tax payments, but also says that going forward taxes on Australian commodities be paid in Australia, which is the way it should be.
STEFANOVIC:
Who are you eyeing off next?
LEIGH:
We went to the election with a package of plans to tackle multinational tax avoidance, to implement the OECD/G20 Two Pillar Agreement as speedily as possible, to move on closing down loopholes around royalty payments and debt deductions. It is really important for business fairness, Pete. If you're a local small business going up against a multinational, then you're fighting with your hands tied behind your back if they're routing their tax payments through low or no tax jurisdictions. We want firms to be focused on serving their customers, on boosting their productivity, not on finding the next tax dodge or tax lurk ‑ the next ‘Double Irish with a Dutch sandwich’, which is one of these complicated tax arrangements we’ve referred to‑
STEFANOVIC:
What was that? What sandwich?
LEIGH:
Double Irish with a Dutch sandwich. Closed down now thanks to the Irish Government, but used by Facebook and Google to massively reduce their tax bill. And we've only found out about some of these arrangements, Pete, as a result of leaks of information from various sources like Panama Papers, Pandora Papers, Paradise Papers, Luxleaks have shone a light on to the extent of corporate tax dodging.
STEFANOVIC:
Okay, just onto more local matters and in particular the RBA. The Prime Minister urging the RBA, which as you know is independent, to not overreach in terms of playing catch up at the moment to contain inflation. Do you agree with him? Would you be echoing those calls?
LEIGH:
The independent Reserve Bank will make its own decisions. But I do think that these are challenging circumstances for monetary policy makers around the world. We've gone from a circumstance in which inflation was at a 10,000 year low to now seeing these substantial surges in inflation ‑ some of the highest rates of inflation that we've seen in our lifetimes. The long run expectations for inflation are for it moderating within the next couple of years. So the challenge for the central banks, not just the RBA but other central banks around the world, is the extent to which inflation will come down in the coming years. It's a tricky balance. They're independent, and I'll leave them to make that call.
STEFANOVIC:
Are you concerned about, I mean, whiplash emerging when it comes to our economy? We're humming along, going so fast, but then if the brakes are applied, then that can cause ‑ and if the brakes are applied too fast ‑ then that can cause ongoing problems that ultimately lead to recession.
LEIGH:
You're totally right about the challenge here, Pete. It's always the challenge that monetary policymakers face. You want to take away the punchbowl before the party gets started, in Alan Greenspan's words. The risk is that otherwise you can end up into a hard landing situation. So I'm confident that the Reserve Bank will be calibrating all of those factors, taking into account the importance of ensuring that we maintain full employment, because full employment means that there are people in our community who are working now who simply wouldn't get a look in if we had double the unemployment rate we do right now. It's a really important economic imperative.
STEFANOVIC:
Okay, Andrew, just a final one here. And this is obviously a big question for Murray Watt, but there's growing calls this morning on our program from Karen Andrews, Jacqui Lambie too, that given the threat of Foot and Mouth Disease ‑ some samples that arrived in Australia already ‑ we should shut the border with Indonesia to buy time. Would Labor support that? Is Labor looking at shutting the border with Indonesia?
LEIGH:
We're looking at working cooperatively with Indonesia. As you're saying, Murray Watt is engaging directly with his Indonesian counterpart. He has put in place a $14 million package, which involves providing vaccines and also engaging in technical assistance with Indonesia. We've got these footpads now in place in a number of international airports. And we've stepped up the scrutiny of meat products coming into Australia, following the discovery of some Foot and Mouth Disease fragments in a sample which was discovered this week. So we're very focused on making sure we work collaboratively with Indonesia. They're an important partner and neighbour in our region. We want to help them to get Foot and Mouth Disease under control in Indonesia, as well as making sure it doesn't spread here.
STEFANOVIC:
But should the border be closed?
LEIGH:
That's not something we're looking at the moment.
STEFANOVIC:
Okay. Andrew, I appreciate that. Thank you.