On February 3, Minister for Small Business and Assistant Treasurer Kelly O’Dwyer addressed the National Press Club. In a speech full of regurgitated spin followed by blustering non-answers, Ms O’Dwyer came across as little more than a partisan party hack.
“When we came to Government, we inherited a tax system from Labor that had failed to keep pace with the changing times. Our government has changed our tax system to help it keep up – because we are absolutely committed to shutting down tax avoidance strategies used by multinationals.
That is why in 2014 we tightened thin capitalisation rules to stop multinationals claiming excessive debt deductions, so they pay more Australian tax.
That is why we introduced the new Multinational Anti-Avoidance Law to stop companies artificially structuring themselves to move profits from doing business here to low tax countries.
All up the ATO estimates that they will raise $700 million over the coming year as a result of the multinational compliance program and hundreds of millions over the forward estimates as a result of the Multinational Anti-Avoidance Law.
And yet Labor voted against the legislation that allows the tax office to target this sort of behaviour.
For all their big talk on tax – they put their base political interest ahead of the national interest.
Not only have we ensured that tougher laws are in place, but we’re ensuring the tax office has the resources to enforce them.”
Surely she jests?
Ms O’Dwyer must think political journalists, and the public, have very short memories. Considering that not one journalist picked her up on these outrageous statements, she may be right.
In the 2013-14 Budget, to tighten generous deductions available under the Income Tax Assessment Act 1997 that allow foreign-based companies to load debt into their Australia entities and then claim deductions from the tax man on the interest paid on those borrowings, the Gillard government announced the abolition of deductions under section 25-90 as part of a package to combat tax minimisation by global corporations, at a projected benefit to the taxpayer of $600 million.
Companies with significant operations overseas get a “double bonus” under the existing law, introduced by the Howard government in 2001, because dividends from their international subsidiaries are tax exempt yet the interest on borrowings used to grow overseas operations is tax deductible.
One of the loudest opponents of the plan to abolish deductions was major Liberal Party donor Paul Ramsay, now deceased, who complained it would make it more expensive for his company Ramsay Health Care to use debt to invest in Europe.
In November 2013, Mr Hockey and the then Assistant Treasurer, Arthur Sinodinos, announced they would not legislate Labor’s package, saying it would impose “unreasonable compliance costs on Australian companies” with subsidiaries offshore. Instead, they would “introduce a targeted anti‑avoidance provision after detailed consultation with stakeholders”.
That ‘detailed consultation’ led to a single line a year later in the December 2014 MYEFO:
“The government will not proceed with a targeted anti-avoidance provision to address certain conduit arrangements involving foreign multinational enterprises, first announced in the 2013-14 MYEFO.”
Mathias Cormann said “Upon coming to office, Treasury advised us that the abolition of 25-90 should not proceed. The Treasury said that to do so would result in significant increases in complexity and compliance costs. They also said it would impede legitimate taxpayer activity in investing offshore.”
That is odd considering, in 2013, Treasury said the practice of global corporations loading up subsidiaries with debt and then claiming relief from the Australian tax man on the interest paid gives an “unfair competitive advantage” over local rivals.
“When some taxpayers avoid or minimise their tax in a sustained way, the tax burden eventually falls more heavily on other taxpayers,” a Treasury issues paper found at the time.
Martin Lock, formerly head of withholding tax at the ATO, said “Cormann is effectively saying that the reason multinationals should continue to be allowed a tax-deductible claim for such attributable interest is that it would be too costly for them to work out the attributable amount, and that repealing 25-90 to end their generous entitlement to the claim would be ineffective. As a matter of both principle and evidence, the proposition is highly questionable.”
John Passant, a tax expert from the Australian National University, wrote “It is unfortunate in the extreme that the Treasurer and Treasury have listened to a group of rent seekers being unjustly rewarded by not repealing section 25-90. But since this is a government of the 1% that is not surprising and we can conclude in fact that Hockey’s bluster about addressing tax avoidance by his rich mates is just that – complete and utter bluster.”
When Ms O’Dwyer said that Labor voted against tax transparency laws, she wasn’t telling the full story.
Tax transparency laws passed under Labor, which Coalition ministers voted against, would have seen the tax details of about 1600 public and private companies with $100 million or more annual turnover published.
After complaints by private business owners that they could be kidnapped and held at ransom when people inspected their published tax information and realised how wealthy they were, the Coalition eventually, with the backing of the Greens, doubled the reportable turnover to $200 million causing the number of companies that will now be covered by the reporting rules to fall from 900 to around 300.
Multinational companies with a global turnover of $1 billion or more will have to prepare “general purpose” financial statements that disclose greater tax details. Contrary to Ms O’Dwyer’s claims to be giving the ATO the resources to enforce the law, thousands of jobs have been slashed. In order to cut costs, the Big Four global audit firms, as well as a couple of second tier players, were invited to participate in a pilot scheme that sees them doing tax compliance for their own audit clients.
Under this External Compliance Assurance Program (ECAP), the tax affairs of multinationals are policed by their own auditors, the very firms who tee up their tax haven arrangements.
It should also be remembered that the Coalition chose not to go ahead with Labor’s requirement for a 3 month log book once every 5 years for people claiming business usage for their car.
The Coalition government has watered down or abolished every transparency measure Labor tried to introduce. For Kelly O’Dwyer to claim credit for legislation to which they were dragged kicking and screaming, exempting as many people as they could on the way while passing on oversight to their private consultancy friends, is ludicrous.
When asked why, when they wanted a national conversation, they had abandoned the Green Paper on taxation reform, Ms O’Dwyer responded:
“Let me say this, I don’t think there is anybody sitting at home waiting for a green paper. What I do think they’re waiting for is they’re waiting for a very clear direction from Government on a range of issues to do with our taxation system. So we will make it very clear that our direction is going in a particular way on those range of issues. How we do that I will leave for the Treasurer to announce. This is obviously very much in his bailiwick, but I don’t think there are a lot of people sitting at home waiting for a green paper. I think they’re sitting at home waiting to see what the options are and I think there are a range of ways we can present them.”
When asked by Kieran Gilbert today, what options other than GST they had to fund income tax cuts, O’Dwyer said “Well, there are a number of options around taxation and that’s what we’re examining at the moment. And before the Budget, as the Prime Minister has said, we will be putting options to the Australian people as to what we think is the right path forward for the Australian people.”
For a government more than 80% through its term, they seem bereft of ideas. Apparently we will be enlightened sometime before the election but I won’t waste time expecting to hear anything of substance from our Assistant Treasurer who offers no solutions but a lot of ‘blame Labor’ excuses.
….. A picture is worth the proverbial ‘ thousand words ‘ … a scrutiny of this one of Ms O’Dwyer speaks long and loud !… and with respect, I gain the impression of a ‘ left over meal ‘ a few days old, just out of the frig. (glad wrap removed) …. certainly lacking in charm, and devoid of warmth ….. fair dinkum !
Genuinely, I’m not speaking in these terms simply because I (absolutely) disagree with her diatribe. Were I to meet her socially, ( highly unlikely) I expect I would acknowledge her and move along as soon as I could, politely.
She would have posed for this pic.so (sadly) this is the public image she wished to present.
Devoid of compassion / empathy … and …. Deputy Treasurer in the current Government ! ….. Sad ! …..
I forced myself to listen to her, which was painful. (I suppose I was hoping to see the result of Malcolm’s “more women in Parliament”). Kaye, you have nailed it. There was do much spin in this address, and lies, and so little fact. She raved at how their so-fantastic anti-avoidance crackdown was going to bring in 700 million this year. Didnt Rupert avoid about 4 times that much, by nodding and winking at the ATO ? To amuse myself lately I turn the sound off on the TV and see how good I am at picking random people as Liberals by their faces. The results are surprisingly accurate, amd my blood pressure is better.
O’Dwyer should have learned a lesson about credibility after this appearance on Q&A. The trouble with the Liberals is they believe the truth is whatever they say it is. The government is populated with O’Dwyer types. They are the only ones allowed to rise in the party
Watch and enjoy the laugh: https://www.youtube.com/watch?v=F-HUhUedI_E
Why do they keep making speeches and giving interviews and press conferences when all they say is ‘all things are on the table’? Why not wait until you have something to announce?
Why won’t they release the modelling about different options so we could join the conversation armed with facts?
Why do they always use the excuse about compliance costs being too high whenever we ask to see figures that businesses have to calculate for their balance sheets anyway? They didn’t care about the compliance cost they thrust onto small business when they turned us into tax collectors and feral accountants by introducing the GST. I have been doing monthly business activity statements since 2000 and I am sick to death of it.
Why do we pay GST on commercial rents? The money goes from me to the agent/landlord to the government and then back to me…why bother?
I’d really like to see a list of what is “on the table” a
Apart from increasing and or broadening the GST and recycling the money with compensation and tax cuts, all I can see is an empty table
Also the compliance cost of offshore detention never seems to be an issue?
Kaye Lee, thanks for exposing their duplicity, but do you see the problem? Things are sufficiently complicated that they can get away with a web of deceit and spin. The average punter is too busy living his/her life to dig into these details and catch them out. At the same time, the “free” press as the MSM is called is owned by these people’s backers and puts out nothing but their propaganda. The only hope is that social media will overcome the effect of the MSM and truth will prevail.
If all business were to pay GST (not just collect it) then we probably wouldn’t have a GST or at least the business lobby groups wouldn’t be as vocal about increasing it!
Furthermore, if we are to have the all-encompassing GST, then it should apply to real estate transactions too (with the removal of Stamp Duties of course)!
Kelly is definitely a Thatcherite young conservative who has been trained in market-oriented economics during her service with Peter Costello. Her conservatism does not extend to curtailment of tax evasion by elite families and corporations or ethical legal protection for refugees. A very disappointing representative in Higgins and a ministerial failure because of her strong ideological convictions.
Kaye. You keep using the word “journalist”. I don’t think it means what you think it means.
You’re no doubt thinking of the old profession where fearless and independent writers conducted methodical research and detailed analysis, and reported upon crucial events in an ethical and unbiased manner, with the express aim of educating and informing the public.
Alas, that profession, like many, no longer exists. Replaced instead by desperate hacks prepared to prostitute the last vestiges of their integrity by performing the cushy job of parroting the words of the government and their corrupt corporate masters, in order to ensure they receive a pitiful paycheck and maintain their job.
Anomander
In my dictionary Journalist = purveyor of propaganda
Are there any ‘desperate hacks’ with a cushy job these days? It’s sites like AIMN that destroyed jobs. And continues down that path. And I suspect most of whom aren’t even union members. How the world is changing,
I’m beginning to worry about this table of ideas, methinks it’s the same size as the one in my granddaughters dolls house.
I switch off when O’Dwyer is on Q and A.
Me too,I just watch her mouth going all different directions , In the end It’s all about blaming Labor.
Raising the GST has been put forward by this govt as a means – the only means – of raising revenue, but as MMT shows, the government has no need for revenue, as it funds its spending from fiat money. So, if not revenue raising, what is the purpose of GST? One of the purposes of taxation is to reduce inequality, but the GST is renowned for being perhaps the most unfair of all the taxes. The only reason I can see for pushing for an increase in the GST is to increase inequality, and that appears to be one of the pathological objectives of the neoliberals.
How frighteningly, frighteningly, right you are silkworm.
So, at last the truth comes out from AIM, not from the ALP, not from the MSM, but from AIM, as usual. Thanks for alerting us to what is really happening and who is responsible. Of course there are billions more in revenue that could be had from this source but the LNP lack the political will to retrieve ‘our’ money from ‘their’ mates.
There is a second purpose silkworm and that’s to proffer the falsity of the Liberals being the better economic managers.
It started with Howard and Beazley’s black hole purely as a political stunt and so that Howard could undertake a mass privatisation of public assets. Beginning the propaganda of a government budget being the same as a household budget and leading to the demonisation of deficits as being the end of the world as we know it, except for current account deficits that is. Somehow they went from being an end of the world debt truck to being completely ignored within 12 months.
The Howard government on the back of being handed a economy “better by half” then luckily ran into the longest sustained period of economic growth in our history capped off with the start of a commodities boom. This allowed them to continue the falsehood of being great economic managers when in truth they were the reverse of that, something governments today are still suffering for and will for a long time to come.
Having started the falsity of deficits being absolutely horrendous under any circumstance, and the MSM running with that falsity, the Liberals have painted themselves into a corner and no matter what the circumstances they need surplus budgets to use as a hammer against Labor. Here they are also hamstrung as one of the ways they have of achieving increased revenue is closed to them as it means taxing and taking public money away from the very people and organisations that heavily donate to them and keep them afloat.
I do note that in the last days of Abbott and into the Turnbull reign the Liberals had started to change the rhetoric on deficits being doom. That message didn’t seem to wash because for so long they have been spruiking the opposite.
libs are pushing the man not policies from the start , looks good when turnbull batters his eyes and makes out his the wise old man , when he changes sentence half way through , they got nothing same theory as seinfield ,a show about nothing
terry, Seinfeld was about nothing, but they were funny, sadly this lot makes me cry. Turnbull’s ‘cool heads, BIG hearts’ is almost funny. Do they have hearts, I ask.
Oops, Abbott’s antics were almost humorous.
Kelly O’Bigmouth.
I heard her on 774 in the afternoon… Keeeerrrist… this really is the woman who puts the BLAH in Blah…. interminably. Stock phrases, motherhood statements; nothing of substance and as pointed out in the article, downright lies! Poor ol’ Ralph Epstein couldn’t even get a word in.
No wonder I call her Kelly “Shaddupa-Ya-Face” O;Dwyer!
She was pitiable more so in qt time next day.
A partisan party hack, well spotted. The same could be said for the vast majority of the LNP.
A more incompetent, inept, lying, rorting, self entitled lot would be hard to find anywhere.
Is it just me or are today’s professional politicians, as personified by O’Dwyer. K, nowhere near the standard of politicians of yesteryear?
Or have they always been of the sad pathetic ilk of miz O’Dwyer.
Just contemptible really, the LNP gang.
Love to watch a verbal contest between her and Cash. You would have to get the first word in or be lost for words. Both would talk under water with a mouthful of marbles and wet cement and say absolutely nothing.
Kelly O’Dwyer is a VERY AVERAGE politician in a VERY AVERAGE government which to date has done not one thing to help Australia. Not one thing since 2013..
I love Aortic’s comment last night @10.57 pm.
Interesting statement : –
“O’Dwyer said “Well, there are a number of options around taxation and that’s what we’re examining at the moment. And before the Budget, as the Prime Minister has said, we will be putting options to the Australian people as to what we think is the right path forward for the Australian people.”
They have been putting these so called options up since the failure of their first budget. I can tell you now, that everything mentioned (in passing or not in passing) over the last two years, will be introduced in their first budget if they are re-elected, they will say, rightly, that it was discussed before the election so if they win means they have perfect right to say it is a mandate.
Be afraid of these very expendable low level government MPs
One tool we have at our disposal right now is to contact Kelly O’Dwyer, or her poor long suffering staff, in order to leave highly loaded analysis about her ineptitude and her transparent party political bias which compromises Australians’ best interests.
I invite ALL of us to get on the blower and let the woman know her lies are noticed and remembered.
Examining back in February, Still examining today, no further ahead.