Acknowledgements
I'm delighted to be here today to help launch the Tax and Transfer Policy Institute.
I am particularly pleased to be joined by ANU Vice-Chancellor, Professor Ian Young, and the Director of the Crawford School, Professor Tom Kompas.
I would like to talk today about the Government's tax reform record, and the importance of the Tax and Transfer Policy Institute to continue to foster tax reform in Australia.
The Government's tax reform record
This Government has a proud record of tax reform designed to support a strong and smart economy, as well as a fairer society that provides opportunity for all Australians.
We initiated the most comprehensive review of the tax and transfer system in a generation, the Australia's Future Tax System Review.
While it was designed to provide a blue print for tax reform for 40 years, the Government has already acted on over a third of the 138 recommendations in a few short years.
Although many people focus on iconic reforms, like pricing carbon pollution, the Government's tax reform agenda has been much broader.
There are many other, less prominent but no less important tax reform stories will help secure Australia's ongoing prosperity.
Since July 2012, the tripling of the tax free threshold from $6,000 to more than $18,000 – the largest increase in Australia's history – has removed the need for up to a million low income earners to lodge a tax return.
This simplifies the tax system for those who can least afford to carry the burden of complexity.
It also increases their rewards for work and boosts participation incentives.
We have removed out-dated disincentives to participation in the personal tax system, and are better targeting concessional tax offsets to those who are genuinely unable to work.
For example, the dependent spouse tax offset, which dates back to a time when male breadwinners maintained a housewife, is being phased out.
We've also removed a perverse incentive for people to drive their cars further just to get a tax concession.
We've made the superannuation tax concessions fairer – by reducing tax disincentives for 3.6 million low income earners to save and by better targeting tax concessions for very high income earners.
We have made it easier for Australia's 3.2 million small businesses to invest through simpler deprecation arrangements that boost cash flow and reduce red tape.
Simpler depreciation rules mean small businesses can now immediately deduct eligible business assets costing less than $6,500.
For these assets, there is no longer a need to keep receipts and track depreciation for years.
In addition, more expensive items can be depreciated in a single simplified pool.
The Government is also supporting businesses to invest and adapt in an economy in transition through the new loss carry-back initiative.
This reform will allow companies to carry back up to $1 million of losses against tax recently paid. This will provide a cash benefit at the time companies need it most.
At the other end of the scale, the growing importance of globalisation and the digital economy has created a serious challenge for an international tax system that was built for the industrial age.
That is why the issue of Base Erosion and Profit Shifting (BEPS) is firmly on the international agenda.
G20 Finance Ministers have asked the OECD to develop an Action Plan, to be considered in July this year. The Government is a strong supporter of this initiative and will continue to take a leadership role through its chairing of the G20 next year.
However, Australia cannot just wait for international action.
Australia must also act at the national level to ensure our tax system remains relevant in the modern global economy.
The Government has already taken steps to modernise Australia's transfer pricing and general anti-avoidance rules. But that is just the beginning.
As part of the corporate tax integrity package announced in the Budget we are taking further steps, including:
- tightening rules that allow multinationals to shift profits out of Australia by artificially loading up their operations with debt;
- moving to counter abuses of mining exploration concessions; and
- closing loopholes in Australia's consolidation regime to level the playing field between local and foreign businesses.
Protecting the integrity of the tax system is a core responsibility for any government.
Integrity measures like these ensure the tax system operates as policy makers intended and supports a level playing for all businesses.
Why the Tax and Transfer Policy Institute is important
We are in a world of rapid change — and the tax system has to keep up. In many ways, the job of tax reform is never finished.
The Government knows this, and that's why we're so committed to fostering a national conversation on critical tax reform issues.
And that is where the Crawford School of Public Policy comes into its own.
The Crawford School has broad multi-disciplinary expertise covering all aspects of public policy across the Asia-Pacific region.
The Crawford School offers insights into the complex ways our region is evolving and Australia's place in this evolving world.
It attracts leading academics and researchers from around Australia and internationally, and it attracts top students who come to learn from – and challenge – the best.
Its growing international reputation as a leading school for research and education in cross-disciplinary public policy issues means the Crawford School is uniquely placed to host the Tax and Transfer Policy Institute.
The role of the Tax and Transfer Policy Institute
So what will the Tax and Transfer Policy Institute be and what will it do?
Well, it will primarily be a research institute, concerned with building a better understanding of our tax and transfer systems.
It will work collaboratively and inclusively with other institutions and think tanks, and it will engage with universities and academics across Australia and the world.
Crucially, it will seek to work closely with policymakers from Commonwealth, State and Territory governments, bringing its research to bear on the key issues of the day, as well as on longer-term policy challenges.
One of the key aims of the Institute will be to participate in the ongoing public debate on tax reform.
The Tax and Transfer Policy Institute will be an important voice in that debate.
Its contributions will be independent – free of political or ideological influence from governments or advocacy groups.
It will be free to research any topic it chooses, and to endorse or criticise any policy or position.
As a result, taxpayers and policymakers alike will be able to trust its contributions.
The members of the Tax and Transfer Policy Institute
Let's talk briefly about who we can expect to see here.
The ANU will shortly commence an international search to fill the position of Chair in Tax Policy and Public Finance to head the Institute.
The Institute will also be overseen by an advisory board to provide it with high level strategic advice.
I am pleased to announce that the inaugural Chair of the advisory board will be the former Treasury Secretary, Dr Ken Henry.
I can't think of anyone better suited.
The Institute will also be supported by a group of Fellows from across Australia and around the world — a group that will provide additional research and expertise.
Some of the world's most esteemed tax experts have already agreed to be Fellows, including:
- Professor Alan Auerbach (Robert D. Burch Professor of Economics and Law, UC Berkeley);
- Sir James Mirlees (Nobel prize winner and author of the Mirlees Review in the UK); and
- Professor John Whalley (Co-Director, Centre for the Study of International Economic Relations, University of Western Ontario).
Together with the Crawford School's existing strengths, the contributions of these and other leading Fellows heralds an exciting time in Australian tax policy research.
Greater use of tax data for policy research
Sound evidence-based policy is crucial to improving the welfare of all Australians.
In this regard, access to data is critical. And in the information age, access to data sets, particularly large data sets, is increasingly important.
Good tax policy research requires good data.
Indeed, access to quality data is critical for sound evidence‑based policy analysis, which is exactly what this new Institute has been established to provide.
As many of you will know, researchers are currently only able to obtain limited ‘confidentialised' tax return data from the Australian Taxation Office for research purposes.
The Henry tax review recommended that more confidentialised tax unit record data be made available for research.
Today, I can announce progress on this recommendation because the ATO has agreed, within current taxpayer confidentiality rules, to put more of its tax return data into the public domain.
The amount of individual tax return data available for researchers will effectively double next year. The potential sample size will double to two per cent of the total taxpayer population and data will be available across twice as many data fields.
Furthermore, the Commissioner of Taxation, Chris Jordan, has agreed to explore ways to making new forms of data available for policy research.
To this end, the ATO will work closely with Treasury and the Australian Bureau of Statistics, as well as with two highly regarded ANU academics, Professors Trevor Breusch and Bob Breunig, to examine ways to make additional data, including longitudinal data, available for research within existing taxpayer confidentiality rules.
The Commissioner has also agreed to work closely with the Tax and Transfer Policy Institute on joint research projects.
Greater access to high quality data will support academics to do more and better tax policy research.
Given that this research is in the national interest, liberating more and better data within our Confidentiality framework will facilitate that outcome.
In turn, providing greater access to high quality ATO data will contribute to a richer understanding of Australia's tax and transfer system and give further insights into possible reforms.
In other countries where tax data has been liberalised, academic research on tax issues has thrived.
Of course, I realise that, from time to time, releasing more tax data may generate some short-term political noise. I would like to make it clear, however, that the privacy of individuals' tax affairs is something that should always remain paramount and we have no plans to change this.
But, over the longer term, I'm confident that more open access to tax data will be of tremendous benefit to Australian and international tax scholarship. It will help improve the transparency of our tax system – and that is a good thing.
Conclusion
Ladies and gentlemen, as a nation, we are currently experiencing one of the most profound economic transformations in our history.
To fully embrace this transformation, we must have an active and informed public debate on the policies that will serve us well for the future.
This includes a debate about the future shape of the tax and transfer system.
The Tax and Transfer Policy Institute will play a vital role in informing the national conversation on tax and transfer policy, offering important insights and ideas to make the tax and transfer system work better for all Australians.
I congratulate the Crawford School for taking on this challenge, and look forward to seeing the fruits of the Institute's role in tax policy scholarship over the coming years.