MICHAEL BRISSENDEN:
Labor will today state its support for the Federal Government's new laws cracking down on multinational tax avoidance.
Announced by former treasurer Joe Hockey in September, the changes include tougher penalties for around a thousand large companies that engage in tax avoidance and profit shifting.
The Government is hoping to pass the changes this sitting week, because they're due to come into effect on January 1st.
I'm joined live in the studio by Assistant Treasurer Kelly O'Dwyer.
Kelly O'Dwyer welcome to the program.
MINISTER O’DWYER:
Good morning Michael.
BRISSENDEN:
It's a rare show of bipartisanship but Labor says it doesn't go far enough. They've put up a number of amendments that they say will make the legislation stronger, will you be supporting Labor's tax package in conjunction with this?
MINISTER O’DWYER:
We have a very strong tax package and we have in fact been leading the world in our response to Base Erosion and Profit Shifting. Joe Hockey, when we led the G20 last year, was at the forefront of making the recommendations that are needed in order to stop multinationals avoiding paying their fair share of tax across jurisdictions.
The multinational tax avoidance legislation that's in the Parliament at the moment will double penalties for those multinationals that transfer pricing and profit shifting, it will make sure that the tax office can assess the risk for transfer pricing by looking at country-by-country reporting, so that we know exactly what multinationals are paying in each country and it means that those people who are operating in Australia need to pay their fair share of tax in Australia if they're earning profits in Australia.
BRISSENDEN:
It's true though isn't it that the laws don't include things like tackling the problem of companies loading debt into Australia to artificially inflate their tax deductions which will leave quite a significant loophole - is it worth looking at that?
MINISTER O’DWYER:
Well, we've already done something on this I mean we've already passed legislation that tightened the loop holes around thin capitalisation.
BRISSENDEN:
But are they tight enough? It's still happening though isn't it?
MINISTER O’DWYER:
We have tightened it extensively. What Labor has proposed though is to increase the cost of capital because they are looking at worldwide gearing ratios. And they don't look at the impact that their changes will necessarily have.
They've also got, I think, a very inflated view of exactly how much money will be raised through their tax package. We would welcome the Labor party releasing all of the assumptions behind their package, they've been very, very reluctant to do that, and one can only query why.
BRISSENDEN:
So you won't support it?
MINISTER O’DWYER:
I'd love to see the assumptions behind their package. Once they release all of those, once they release those assumptions, I'm happy to have a look at their package but until they do that it's pretty hard to take it seriously.
BRISSENDEN:
How much revenue do you think this will this raise? Because it's hard to know isn't it?
MINISTER O’DWYER:
Well we already know that the Australian Taxation Office for instance has been provided with $87 million over the next three years to specifically look at multinationals and where they're involved in these sorts of activities. They had 30 companies under investigation, it's now increased to 80. Already $400 million of liabilities have been raised in that short period of time, so I won't give you an actual figure but we certainly know that there will be revenue raised from this measure.
BRISSENDEN:
Okay on broader tax measures, because this is a conversation we are constantly having at the moment. Treasury modelling is modelling the effective increase in the broadening existing state taxes. Should more be done by the states?
MINISTER O’DWYER:
Well it's very clear that the Treasurer had good conversations with the state Treasurers on Friday last week and that there is more for state Treasurers to do. State Treasurers are very keen to talk about their budgets and the fact that they would like more money from the Commonwealth to fund their budgets but they are not very good at looking at their own tax powers and whether in fact they ought to be reducing their spending or if they want to continue to increase their spending whether they need to look at their own tax powers in order to do that.
BRISSENDEN:
And where should they be looking?
MINISTER O’DWYER:
Well we're looking at a whole range of measurers, there are a number of measures that have been discussed at that conference and indeed there is a fair bit of modelling to be done but we're not dictating to them that they ought to be raising taxes. We're simply asking the question that if they want to continue spending in the way that they do, they need to look at their own tax base.
BRISSENDEN:
What about the GST, what's your view on raising the GST?
MINISTER O’DWYER:
As we've said we're not taking any options off the table but the idea of simply raising more taxes is not one that sits well with this Government. We believe that you need to control spending as well, and that's one of the biggest things that we can achieve as a Government is to control the spending so that we can continue to provide the sort of living standards and prosperity that Australians rightly demand and expect.
BRISSENDEN:
Right but that suggests you're not in favour of it.
MINISTER O’DWYER:
I'm not taking anything off the table. We've said that we're going to have an open discussion around this and it's important that we do that, and you can't take things off the table if you're going to have that discussion.
BRISSENDEN:
Okay. Dan Tehan, one of your colleagues, the Liberal chairman of Parliament's Economic Committee, says we should look at abolishing income tax all together for anyone on and up to the minimum wage of about $32,000 a year. Is that something you'd support or consider?
MINISTER O’DWYER:
Dan is a very valued and respected colleague of mine and we welcome all good ideas. He has contributed an idea to the tax discussion and debate. I welcome that, and I only encourage the Labor party to also contribute to good ideas to this discussion and debate.
BRISSENDEN:
Okay I can't let you go without asking about the polls today because everybody's talking about them, although it is only one poll, but the Fairfax-Ipsos poll out this morning puts the Coalition ahead of Labor 53 to 47. Malcolm Turnbull preferred leader at 67 per cent to Bill Shorten's 21 per cent, pretty significant turnaround in isn't it, what's done that?
MINISTER O’DWYER:
Well Michael you're the commentator on the polls, you're the expert on the polls.
BRISSENDEN:
I'm far from an expert on any polls…
MINISTER O’DWYER:
I don't profess to be an expert. I'll let you do the commentary.
BRISSENDEN:
Okay, but clearly there has been a shift in opinion. Now voters expect a different sort of Government from you now, don't they? You would have to concede that.
That's what's driving this I assume.
MINISTER O’DWYER:
Well we're a Government that is focussed on increasing the prosperity of all Australians, we're going to do that through innovation, harnessing the innovation potential of our small business people, of our start-ups, the ingenuity of our people - who are our greatest resource - and we're also keen to make sure that as we do that, we increase jobs in this country. It's a very positive agenda for our country and I think that's what people respond to.
BRISSENDEN:
Well any chance of an early election if this keeps going?
MINISTER O’DWYER:
Well again you ask me about things that I can't answer you on. We're focused on getting the job done Michael and there is quite a long way until the next election; we're focused on being the best possible Government to increase the prosperity of all Australians.
BRISSENDEN:
Okay, Kelly O'Dwyer thanks for joining us.
MINISTER O’DWYER:
Thanks very much Michael.
BRISSENDEN:
That's Assistant Treasurer Kelly O'Dwyer.