Stephen Cenatiempo:
The Prime Minister said yesterday, we came up with the plan, the NBN is ours and only we’ll keep it in public hands. When Labor’s plan was, as I said, to sell it and privatise it within 5 years, well that didn’t happen. And we’re supposed to forget all of that. Let’s get talking. Canberra who am I? Joining us is the Assistant Minister for Competition, Charities and Treasury and the member for Fenner, Andrew Leigh. Andrew, good morning.
Stephen Leigh:
Morning Stephen, how are you?
Cenatiempo:
Very well. Happy New Year. Look, this is, this is a great –
Leigh:
Good to be with you. Happy New Year.
Cenatiempo:
This is a ridiculous scare campaign. I mean the whole privatisation arm, Labor’s plan was to privatise this thing at the beginning, at the very outset.
Leigh:
Sorry Stephen just lost you for a moment. Are you still there?
Cenatiempo:
Yeah, yeah. I was just saying that this scare campaign about privatisation of the NBN, Labor’s plan was to privatise it from the very get go.
Leigh:
Well, we’ve got pretty good evidence looking at a whole range of other assets that if you privatise a monopoly it ends up being bad for consumers. We’ve seen this in rail networks overseas. We’ve seen this with a whole host of utility assets. So, not privatising the NBN, it’s just sound economics.
Cenatiempo:
But then why did Labor plan to do it in the first place then if it wasn’t sound economics?
Leigh:
The evidence has accumulated over time. It was left as an option back then, but it’s certainly become clear now. I’ve talked to a lot of competition experts and many of them have shifted their view on privatisation over the course of that period and taken the view that if you’ve got a monopoly asset it makes no sense to take it out of public hands. I was just astounded when in parliament the Coalition wouldn’t vote for a bill to make sure the NBN stayed in public hands.
Cenatiempo:
Well but I mean that’s just good government to leave these options open particularly. Look, and I’ll play for you, this is what Kevin Rudd said the day he announced the NBN: ‘The government will make an initial investment in this company but intends to sell down its interest in the company within 5 years after the network is built’. And particularly given that the technology has moved on – as I said, we’ve got 5G and Starlink now which are far superior to the NBN. And in the case of 5G, a lot more affordable.
Leigh:
The NBN is the backbone of how most Australians use the internet. Fibre is future proof and the reason for the investment of the NBN is in order to ensure that we’re replacing that copper asset which is steadily depreciating at a rate of about 4 per cent a year.
Cenatiempo:
But it’s not future proof because we’re not plugging into walls anymore and we weren’t when the NBN was first devised.
Leigh:
It’s still the way in which most Australians are accessing the internet, Stephen. It’s still a way in which people can be sure that they’ve got a reliable connection if they’re working from home. Many of your listeners will be working from home at least a day a week and relying then on being able to do a video call. Most of those calls are still being made over the NBN. It makes sense for businesses, for households to have a first rate NBN, not a second rate one.
Cenatiempo:
Let’s talk about something we can probably agree on. Well, at least in principle, maybe not in practice, but you talked late last year and we didn’t get a chance to talk about it, about taking action that said multinationals pay their fair share of tax in Australia. How do you actually do this? Because the reality is that the tax regimes exist, but smart accountants work their way around it.
Leigh:
Stephen, this really is a kind of ongoing job. Multinational tax reform is never going to be finished because invariably firms are finding tricky ways to get around the laws. What we’ve done is put in place a world-leading country-by-country reporting system which will see big firms reporting where they’ve paid tax in certain jurisdictions that have been used as low‑tax or no‑tax ways of getting around our company tax system. That’s really important for Australia. Transparency is one way of making sure multinationals pay their fair share alongside the global minimum tax that we passed to the parliament last year as well.
Cenatiempo:
But won’t they just report losses?
Leigh:
Well, they have to report exactly where they’re paying tax. And if you’re talking about reporting in the Bahamas or the Cayman Islands, in many cases, I think they’re going to be reporting significant profits there. And for some of these firms, they have big profits in jurisdictions where they have no employees and hardly any sales. That’s drawn a lot of scrutiny over recent years. It’ll draw more scrutiny thanks to Australia’s world-leading country-by-country reporting scheme.
Cenatiempo:
Okay, so what you’re saying is that if they’re paying tax in another country we’ll know about it. But then what do you do?
Leigh:
Well, that’s certainly something that’s going to be relevant to reformers. It’ll be relevant to journalists like yourself. It’s going to be relevant to academics who study these things and be relevant to the tax authorities. All of us have a stake in the multinational tax system working well, transparency really is the bedrock of what we’re doing. But of course, we’re also changing the laws, making it harder to use the debt deduction loophole, that 15 per cent global minimum tax measure I mentioned before. If you’re going for a big tender in Australia now, Stephen, you’ve got to disclose your country of tax domicile. All of this is about making sure that local Canberra businesses aren’t competing against multinationals with one hand tied behind their back.
Cenatiempo:
Yeah, no, I understand that and I understand that aspect of it, but from the perspective of actually collecting tax, are we going to be able to collect more tax from these multinationals under this regime? I mean, if you, let’s say a company, you know, Company A is paying a billion dollars in tax to, you know, the Cayman Islands, does… Does the Australian Government have an opportunity to claw some of that back?
Leigh:
Yeah, I think you can draw a straight line between transparency and tax paid. We’ve seen this in a whole range of other contexts. When it was revealed that Starbucks wasn’t paying any tax in the UK, they even voluntarily made a tax payment. When it was revealed that Apple was stateless for tax purposes by a US Congressional committee, they end up changing those arrangements. The Irish government ended up shutting down a loophole called the Double Irish Dutch Sandwich due to international pressure. So, yeah, transparency makes a big difference.
Cenatiempo:
Okay, but, yeah, but how do we capitalise on that is the point I make.
Leigh:
We get our fair share of tax if tax havens are shut out of business. It’s in Australia’s interest to make sure that tax havens are no longer operating. Country-by-country reporting is about ensuring that.
Cenatiempo:
Okay, fair enough. All right, that makes sense. Andrew, good to talk to you. We’ll catch up again in a couple of weeks.
Leigh:
Thanks, Stephen.