WARREN MOORE:
Well, first tonight, one of the flagship promises as part of Labor's 2022 election winning agenda was to make more changes towards how multinational companies are taxed. Now, as we move towards the next financial year, these new regulations are set to come into effect. Included in the initial raft of changes was the requirement for every multinational entity with any Australian activity to publicly disclose their approach to tax and their effective tax rate of each jurisdiction. But as we approach July 1, the goalposts have slightly shifted, with pressure put on the government to alter their rules, less risk exposing sensitive commercial data undermining cooperation by international revenue authorities. So, has the government got the outcome they wanted? And how will that affect the budget? Andrew Leigh's the Assistant Minister for Competition, Charities and Treasury and Assistant Minister for Employment and joins me this evening on Money News.
Andrew, good to have you on the show again.
ANDREW LEIGH:
Great to be back with you, Warren.
MOORE:
Well, interesting times. I mean, it's almost near the end of the financial year, but let's start with the multinational tax changes. I mean, have you've got the outcome that you were looking for and are you confident that this system will work when we tick over to July 1?
LEIGH:
Multinational tax reform is an ongoing project. I don't think we ever imagine that we'll hang up the tools and say, job done. I introduced in parliament last week two important parts of our reform agenda. One, reducing the capacity of multinational firms to use debt deductions to bring down their tax bill, and another, requiring big firms to disclose the countries of tax domicile for their subsidiaries. So, that puts two pieces in place. One is a transparency piece, and another one is cracking down on deductions. Now, that one returns $300 million a year to the budget bottom line, but most importantly, it starts to set in place a level playing field. And so local Aussie businesses aren't competing against multinationals with one hand tied behind their back simply because they're not operating out of the Caymans.
MOORE:
I mean, there has been some dialogue, obviously, since you made the initial announcements, and we've seen these changes to the original plans after business groups expressed their displeasure. Are we getting a softer result? Are you still getting the result you want?
LEIGH:
We're always working with stakeholders on this. We want to make sure we get the results right, and that's important to us. As is working with other countries. Country‑by‑country reporting is something we're committed to and working with the OECD and European Union countries in order to get an approach to reporting there, which is right for them from the standpoint of transparency, but also doesn't risk Australian tax authorities being cut off from international information exchange. We work through it with stakeholders, we're a pro‑business government. We want to get this right.
MOORE:
I mean, generally, talking about the economy, the focus on households at the moment is this ongoing battle for inflation reduction and interest rates to stop rising. People are very frustrated and they're doing it tough. Can you understand those frustrations?
LEIGH:
Absolutely, yes. I mean, I hear it all the time when I'm out in the street stalls, people just feeling that there's more month than money and that people are really struggling to get ahead. We've just delivered the largest investment in bulk‑billing incentive. We're reducing the cost of medicines. We've got $3 billion of electricity bill relief that's flowing through the states and territories, and we've increased Commonwealth Rental Assistance significantly. We're doing all of that because we understand households are under financial pressure, but that we need to be targeted in how we spend money. And as the Reserve Bank Governor has said, he doesn't think the federal government's budget is putting upward pressure on inflation, if anything, the reverse.
MOORE:
Yeah, but I mean, it's almost two months on from the Budget, isn't it? And I think you're right in saying it's not an inflationary Budget. Could there have been some more spending trimmed, do you think?
LEIGH:
Well, remember that this financial year, the former government had forecast a $78 billion deficit. We're projecting a $4 billion surplus. So, that's a pretty big turnaround. That's come from banking a lot of the revenue upgrades, making tough decisions where we need to, and ensuring that the government is tightening its belts in the way in which Australian households are having to.
MOORE:
Yeah, well, I mean, what's very important, of course, coming up as well when it comes to the Reserve Bank is the Treasurer making his choice on either to extend the contract of Philip Lowe or to appoint a new Reserve Bank Governor. I don't think there's a time in recent history where this position has been so prolific purely because some of the rather loose predictions about when in interest rates were going to go up and by how much and how many times. So, how important do you think this is going to be, this next choice about the Governor albeit a new one, or the extension of Philip Lowe?
LEIGH:
Look, the Reserve Bank Governor is definitely an important role, there's no doubt about that. And the Treasurer is consulting with colleagues. But it's important too, that we get the institution right. One of the reasons we've done this once‑in‑a‑generation review of the Reserve Bank is to make sure that it has the expertise it needs to support the Governor, whoever he or she is, in making the right decisions. So, the move towards an expert monetary policy board mirrors shifts in other countries that have seen experts step up to the table to help with those important decision. And some of the recommendations the Reserve Bank's review has made around governance has been important in terms of getting that institution humming as well as it can.
MOORE:
I mean, when you talk about perception and that's what I'm getting on to here, purely perception, not necessarily the figures and the numbers and so forth. Do you think the public has lost a bit of faith in the Reserve Bank because of the times we're in?
LEIGH:
Look, I don't think it would win a popularity contest today, but I don't think that's the game it's in. It's in the game of trying to tackle inflation and keep unemployment low, and that's what it should be focused on. I don't think it's helpful for politicians to be taking potshots at the Reserve Bank. We need to be making sure that our decisions are also placing downward pressure on inflation, which is why we've made those targeted decisions around energy, rents and out‑of‑pocket health costs in order to assist with fighting the inflation challenge.
MOORE:
One word that's being used a lot as the cure‑all for our problems at the moment is productivity. What role does your brief within competition have to play in terms of Australia's productivity?
LEIGH:
Competition has been really important historically for Australian productivity growth. The reforms that Fred Hilmer started off in the early 1990s really laid the groundwork for that surge in productivity over that decade, which saw some $5,000 a year into the pockets of the typical Australian household. There wasn't one single reform out of Hilmer. It was a process working with the states and territories collaboratively. So, I'm engaged with the state and territory governments as well as federal counterparts, to see what we can do to make sure that the Australian economy is more dynamic. We've had this decline in the creation rate of new employing businesses, an increase in market concentration and markups and suggestions the Australian economy has become less dynamic. So the government is really focused on getting that chart turned around.
MOORE:
Okay, now you've got many facets to your portfolio, obviously, just to move on to charities for a moment, the latest Australian Charities report, which we're pleased to say, reads, the donations have increased by $676 million to a total of $13.4 billion. And charities, if government had to fund a lot of the work that they do, that'd be a big, big impost on the Budget, obviously. So, do you think it's going to be difficult during this tough economic time for our charities and people? Will they continue to put their hand in the pocket?
LEIGH:
Yeah, look, many of our charities are doing it tough, dealing with reporting requirements that are more onerous than they need to be. And the downturn in volunteering numbers. We're working with the states and territories to harmonise charitable fundraising laws and so they don't have to jump through seven hoops every year in order to get registered to raise money online. And also putting together a national volunteering strategy led by Amanda Rishworth, which will see more volunteers flood into our great charities. There's already really good volunteer matching engines, such as Go Volunteer or Seek Volunteer, which can help people find organisations in their local area. And at the end of the tax year, I would encourage your listeners, if they've got some spare money, to think about making a donation to your favourite charity. They really do need it right now.
MOORE:
And obviously, you're the first interview we're doing on a Monday, so first one this week. Which means that finally, I've got to say, about the passing of Simon Crean over the weekend, and look, I think the show would be remiss, not to mention the huge impact he's had on Australian employment and business and trade. Can you do the hard task of summing up in your mind his contribution to the Australian economy?
LEIGH:
Simon Crean came from a really strong Labor family. When he left Parliament in 2013, he said that there had been a Crean in public life since the 1940s. He served as Trade Minister, he worked in industrial relations portfolio, worked as Arts Minister and had a passion for the union movement. He was somebody who was a true egalitarian, but also a strong internationalist and he worked on chairing the European Australian Business Council after he left the Parliament. I overlapped with him for three years when I was here and he was just a delightfully, generous colleague with his time and his energy, always ready with a smile and a joke, but also a living embodiment of Australia's oldest and greatest political party.
MOORE:
Andrew Leigh, Assistant Minister for Competition, Charities and Treasury. Thanks for your time.
LEIGH:
Real pleasure, Warren. Thank you.