6 November 2017
Transcript - #2017215, 2017

Interview with Sabra Lane, ABC AM

SUBJECTS: Paradise Papers; Turnbull Government’s crackdown on multinational tax avoidance; the unions’ xenophobic campaign against the China-Australia Free Trade Agreement; Australia’s strong trade results; citizenship.

SABRA LANE:

Treasurer, good morning. Welcome back to AM.

TREASURER:

Hi Sabra, how are you?

LANE:

I am well. The Paradise Papers that provided an insight into how multinational companies do minimise their tax, here in Australia a total of 19 companies who are already on the ATO's radar, following the Panama Papers release, 13 of them are still under review – what can you tell us about these investigations?

TREASURER:

They have already, the ATO, been engaging with other partners around this issue and have already identified some of the issues that undoubtedly will be identified when these papers are released later today. So, basically they're on the front foot. After the previous matter the International Taskforce on Shared Intelligence and Collaboration - doesn't exactly roll off the tongue – that is a group that have been active and they've been leading as well. As you say, in some cases there will be people who are caught up in this who have done nothing illegal and there's no suggestion of that, I'm sure. What it does do is shine a further light on the way that structures are put in place. Now, that's why I was pleased to hear the tax office say at estimates recently that they believe the arrangements we put in place for multinational anti-avoidance and matters like that are entirely fit for purpose and is doing the job we want it to do.

LANE:

This latest batch of papers, the Paradise Papers, show that Australia's largest coal miner, Glencore, a Swiss based company, used the swap financing scheme that came under scrutiny by the tax office. Were you made aware of Glencore's actions and are you confident now that they are playing by the book?

TREASURER:

This is what the ATO are saying. The ATO have already, as you said, they have taken action in relation to those matters and their structures have been changed, as you would expect them to be once the ATO has intervened. I think what that demonstrates is the ATO being on the job.

LANE:

What do you say to Labor's claim that until the Government commits to a comprehensive tax haven transparency package, that the public is going to rely on releases like the Paradise Papers to expose the murky use of tax havens?

TREASURER:

What I would say is what the tax office has said. The way country by country reporting works – and it's now in place – is if you were to go down Labor's path that the information would turn off. It would just turn off. I think it shows extreme naivety on behalf of the Labor party in not understanding how the base erosion profit shifting process has worked. The countries themselves, the OECD, all of them know the best way is to ensure the tax jurisdictions and the officials who run those have access to that information and they can share it with each other so they can go after those who are avoiding tax. That's how it works, that's why it works. I'm not going to do anything that's going to undermine a key information tool that is actually helping tax jurisdictions, not only here but overseas, to be able to put an end to these types of tax shifting arrangements.

LANE:

How confident is the Government in finalising a specific trans-pacific partnership deal without the United States by the week's end?

TREASURER:

Well, Minister Ciobo is closer to that. Steve Ciobo, through DFAT, released a very important report which shows that Australian households are more than $8000 better off a year because of trade. Now, investment is up 12 per cent, wages in fact are up 7 per cent and growth is up 5 per cent because of trade. These are very important numbers and they are numbers that I have been highlighting when I was at the APEC Finance Ministers Meeting recently. Trade means more and better paid jobs. That is what it means and that is why the evidence, undoubtedly, backs that in.

LANE:

Your former colleague and former trade minister Andrew Robb says the US decisions to walk away from the Trans-Pacific Partnership has created a leadership vacuum that he suspects China will only be too happy to fill. Are you in agreement with him on that?

TREASURER:

Well, I am not really commenting on the geo-politics of it all but what I do know is that there is not a country that sits around the APEC table, for example, or around the G20 table for that matter that hasn't benefitted from trade. Trade creates jobs, it lifts people's living standards, it improves the function of our economy and that is what the DFAT report has clearly said. What I am more worried about is when we did the China-Australia Free Trade Agreement the Labor party had to be dragged kicking and screaming to the table on it and the unions attacked it in the most xenophobic and disgraceful way you can imagine. So, what matters is what Australians think about this. We are pro-trade because it means more and better paid jobs and we would like to see that position continue to be held and we have been very forceful advocates of that even with some of our best friends.

LANE:

People though are very sceptical about Free Trade agreements and liberalisation. That has helped fuel the rise of Donald Trump in part and other protectionist parties like One Nation – it is polling 13-14 percent in Queensland. How will you counter that?

TREASURER:

One in five jobs is dependent on trade. One in five jobs is dependent on trade. Now, 40 per cent of the economy, when you look at the two-way trade that occurs in our economy, not even Chris Bowen seems to understand that and he was actually saying that we weren't an export intensive industry last Friday. We have just had our 11th successive positive trade balance which is the best trade result in 40 years. You want to know why we are getting more jobs in Australia? This is a key reason. It's not just because of the other policies we have on taxes for small and medium size businesses but we have been a pro-trade government and it has been generating jobs and better paid jobs.

LANE:

For some reason though that is not resonating with a large chunk of voters – why not?

TREASURER:

Well, it's for Governments to continue to make the case as we have always heard. We have never stepped back, ever as a Government, from the importance of securing these deals. We have negotiated five agreements as a government that has given us access to 1.6 billion customers around the world. That is good for Australian jobs and the evidence that has come from the independent report demonstrates that evidence and only gives us greater encouragement to say to Australians that we are growing the economy, that is why you will get more and better paid jobs, that is why you will get more competitive prices on the things that you are now buying in this economy. Prices were 3 per cent lower as a result, the study showed. So, we can't deny future Australians the benefits of trade that the current generation of Australians have appreciated. It is one of the reasons why we have the second highest GDP per capita around the G20 table. It's because we have been a successful trading economy, pretty much since settlement.

LANE:

On the citizenship issue now, the Government is resisting calls for an audit. The former Liberal Premier Jeff Kennett says that he is ropable at the lack of leadership in Federal politics but the political task, the view of that has never been lower in the eyes of voters and that it ought to be cleared up. What do you say to Mr Kennett?

TREASURER:

We have a process which the Government has honoured and that is a simple process and that is where there are threshold issues that need to be referred to the High Court they have been and would be. Now, if there are members of parliament who believe that other members of Parliament are not in compliance well they can do what anyone in the Parliament can, they can stand up and they can make their case rather than just slinging mud about the place. It is still true in this country that members are considered to be innocent of these matters until there is substantial evidence that would suggest that matters should be referred otherwise. Now, that is what we are doing and we have backed that up because as a government we have referred our own members. We have voted to do that. That is the process that is in place for settling this.

LANE:

There are crossbenchers in the lower house, like Cathy McGowan who want criminal penalties in place for inaccurately filling out nomination forms. She also wants an audit saying this needs to be cleared up and why shouldn't this be regarded like the Government treats those on social security fraud for example?

TREASURER:

Again, if there is a member, for whom there is substantive evidence that they are not in compliance, not just with Section 44 as it applies to citizenship but any other matter; disclosure of interest, office of profit under the crown, there are any number of matters that we have to be compliant with and when you start to think about what has been suggested and practically work through it, I mean what is the suggestion? That maybe a former judge would be appointed, that they would come and demand the birth certificates of people's great grandparents from places far flung, that we are going to look at the citizenship laws of 170 countries? I think we have to just get a grip on this. There is a process and Australians want us to continue to focus on passing laws and almost 180 pieces of legislation have been passed by this Government since the last election. We have got a very big agenda of things still to be doing this year and I don't think the public would want to see us distracted by a genealogy commission.

LANE:

Alright, Mr Morrison, thank you very much for joining AM this morning.

TREASURER:

Thanks very much Sabra.