Liberal Government Wimps Out on Multinational Tax Avoidance

Today's reports that Treasurer Joe Hockey has backed away from action to tackle companies that avoid tax by shifting billions of dollars in profits between Australia and their international subsidiaries are remarkable for a number of reasons.

First, the Government said it would act to stop tax avoidance by profit shifting across international borders – though given the mountainous pile of broken promises perhaps a gap between promise and performance is no longer remarkable.

Second, the issue of global corporations loading up subsidiaries with debt so they can claim to have made all their profits in low tax jurisdictions was a major topic of discussion at the G20 Conference, where countries were urged by civil society to stop global tax avoidance. Australia needs to be part of the international effort to combat this.

Third, only this week the government was crying poor in releasing its MYEFO estimates and saying it had suffered a revenue downturn and would have to cut spending. The projected benefit to the revenue from abolishing deductions under Section 25-90 of the Income Tax Assessment Act is $600 million. Before the government attacks students, pensioners and the unemployed it should enact this measure and make sure multinational corporations are paying their fair share of tax.

Mid-Year Economic Forecast

There are five points that ought to be made about Australia's deteriorating budget position.

First, Joe Hockey and the Liberal Government must never be allowed to forget the standards they applied when the Labor Government's predictions of a Budget Surplus did not eventuate due to declining revenue. They insisted this was no excuse, and accused the Government of incompetence and worse – Joe Hockey talked about people going to jail over such matters. They said there would be no excuses.

Second, the big end of town and their Liberal Party and media cheer squad will try to use the deteriorating Budget position to promote their ideological agenda of cutting back Government spending, jobs and services. No matter what the state of the economy they always advance this agenda. But Joe Hockey's Budget has damaged consumer confidence and contributed to the rising Budget Deficit and rising unemployment we now see. It was a shock, not a shock absorber. Austerity measures in Europe following the GFC made those economies worse. They didn't work there and they won't work here.

Third, it is possible to balance the books without taking the axe to health, education, or pensions. The Liberal Government has chosen to greatly increase Australia's defence spending to 2 per cent of GDP. This is an arbitrary figure and an increase which will not make Australia a safer place. We could do much more to close tax breaks both offshore and onshore, which have increased substantially in recent years. We don't need to continue negative gearing, which costs taxpayers dearly and pushes up the cost of housing at the expense of young Australian homebuyers who can't afford to buy a home.

Fourth, we have pursued policies for years now of globalisation and free trade which have promoted mining and damaged manufacturing. This was very short-sighted. For years I and others have pointed out that we should be doing more to spread the benefits of the mining boom, and that it was foolish to put all our eggs in the mining basket, and allow the dollar to rise and kill off manufacturing. Our economy has become too narrow, and we are way too vulnerable to things like a fall in commodity prices. The free trade fundamentalists have left us vulnerable and exposed.

 
Finally, we have lost interest in the current account deficit and the national debt. There was a time when the Liberal Party rolled out a "Debt Truck" to draw public attention to our trade imbalance and our overseas debt. But while the current account deficit and the overseas debt turned the Debt Truck into a metaphorical Road Train or Ocean Liner, they lost interest in this. Instead of encouraging household saving and investment by Australian owned companies or superannuation funds, they think foreign debt is not a problem provided it is turned into equity – selling off the farm. Again this is an incredibly short-sighted view and a recipe for Budget Deficits as far as the eye can see.

Register of Foreign Land Ownership Delay

I am concerned that the Australian Government's Register of Foreign Land Ownership has been delayed. This is something Australian people tell me they want, and Australian Governments regularly promise, but which never seems to happen.

Recently I visited Colac to discuss with Colac dairy farmers their concern at the prospect of foreign large scale purchases of dairy farms in South-West Victoria. The point they made to me was that if a foreign company buys Victorian farmland, brings in foreign workers to produce the milk, exports the product to foreign consumers, and the profits also go offshore, how do Victorian communities benefit? What kind of future does this provide for our young people?

I have also raised in the Parliament the use of holding companies to disguise the real levels of foreign ownership. Until a proper Register is put into place, I doubt that we will know the real levels of foreign ownership of Australian land.

 
I am not opposed to foreign investment. But there is a world of difference between investment, where the investor shares the risks and rewards with local businesses and employees, and ownership, where Australia loses control over its own destiny. We need real transparency about foreign ownership of Australian land, and we need it sooner rather than later.

Appointment of Former Liberal and National MPs

Attorney General Senator Brandis has continued the Labor Government's tradition of appointing former Liberal and National Party MPs to government positions.

Senator Brandis has appointed former Nationals MP Paul Neville to the National Film and Sound Archive Board, former Liberal Senator Gary Humphries as a Deputy President of the Administrative Appeals Tribunal, and former Liberal Minister Ian Campbell and former NSW Liberal leader Peter Collins to the Council of the National Maritime Museum.

Senator Brandis has also appointed right-wing columnist Janet Albrechtsen to the council of the National Museum of Australia.

Former Liberal and National MPs Bruce Baird, Brendan Nelson, Peter Costello, Warwick Smith, Margaret Reid, John Fahey, Ross Cameron, Chris Puplick, Russell Trood, Paul Calvert, Nick Minchin, Peter Rae, Trish Worth, Sandy McDonald and Alexander Downer received Government positions during the period of the Rudd and Gillard Governments.

Unemployment Jump More Bad News for Santa

A week ago Joe Hockey was urging consumers to look after Santa. But the latest rise in unemployment is still more evidence that the Liberal Government is Santa's great enemy.

Unemployment has risen to 6.3 per cent. Over 775,000 Australians are out of work. The total number of hours worked in Australia last month actually FELL by 0.3 per cent. This is clearly a recipe for an income recession. This is clearly a major reason why the Westpac-Melbourne Institute Consumer Sentiment Index is now at its lowest level in over three years. Ugly news for Santa.

The big end of town doesn't care about unemployment or job insecurity, because they believe they make better profits if they can keep wages down, and they think that unemployment and job insecurity through a part-time, casualised workforce, keeps wages down. They should be careful for what they wish for. The economy is not travelling well, and could get worse.

There is a number of things the Liberal Government could do to stop the slide in consumer confidence. They could abandon their plans to deregulate student fees and to cut pension indexation. They could abandon their plans for job cuts in health, education, the CSIRO, the ABC, and many other areas of the public sector workforce. They could stop undermining manufacturing in Australia's automotive component parts and shipbuilding industries.

But most of all they should put a stop to the migrant worker programs that skyrocketed in times when Australia's unemployment was much lower and job security was much higher.

It is crazy that we now have permanent net overseas migration running at three times the rate it did during the 1990s, and in addition we have over one million people in Australia on temporary visas which give them work rights.

The Consumer Sentiment Index and today's unemployment rise show the absurdity of Joe Hockey urging consumers to spend up big for Santa. It is like a Football Coach who has his players run twenty laps and do a hundred push ups on the morning of a match, then exhorts his team to go out and kill em.

Serious Questions Asked About Australia India Nuclear Agreement

John Carlson was the Director General of the Australian Safeguards and Non-Proliferation Office for over 20 years. There is serious credibility that comes with that. I have never heard him accused of being an anti-nuclear activist – on the contrary I recall he and his office coming under fire from certain members of the Joint Standing Committee on Treaties for being too close to the nuclear industry.

So it was with considerable interest that I read his submission to the Treaties Committee Inquiry into the Australia India Nuclear Agreement, which says that there are good reasons for concluding a nuclear co-operation agreement with India, "but not this agreement".

Mr Carlson says that there is no valid reason to weaken Australia's usual safeguards standards, but that this agreement does weaken those standards, such as in the area of accounting and tracking for Australian Obligated Nuclear Material (AONM), the right to see relevant International Atomic Energy Agency Reports, and the right to return of AONM if there is a breach of an agreement.

An important message in Mr Carlson's submission is that India has always insisted on being treated the same as other prospective uranium purchasers, and now should be granted that wish, rather than being given more favourable treatment than other customers. He says that bringing India into the mainstream means that India should be prepared to adopt global norms and practices, not expect the rest of the world to fall into line with what India wants.

Mr Carlson believes that India should -

• commit to pursue and support nuclear disarmament;
• commit to full separation of its military and civilian nuclear programs;
• sign the Comprehensive Test Ban Treaty; and
• support the Fissile Material Cut-off Treaty.

 
The submissions reinforce my increasing view that civil society should have better access to treaty negotiations while they are taking place, rather than after the horse has bolted. Clearly the Treaties Committee will need to consider the submissions from Mr Carlson and others seriously.

Second Victorian Government Brought Down by Rapid Population Growth

Rapid population growth is political poison, and has brought down a second Victorian Government in four years. In the past decade Australia's migration rate more than doubled. The greatest consequences of this dramatic increase have been in Melbourne, which started growing by more than 200 people a day, 1500 each week, 75,000 each year.

As I pointed out at the time, the adverse consequences of this growth for planning, transport, the environment and the cost of living were crucial in bringing down the former Labor Government.

But the incoming Liberal Government did not understand why it had won, and fell for the trap of believing its own propaganda. Melbourne's population growth continued apace, and Ted Baillieu said strong population growth was vital to the state's economic future. He did not last long.
 

His successor Denis Napthine did not last much longer. How he must be wishing he had put money into Victoria's emergency services and TAFE, instead of allocating billions to a new tollway to try to fix population driven traffic congestion.
 

I congratulate new Premier Dan Andrews on his remarkable win, defeating a first term government for the first time in sixty years. He showed great courage and foresight in supporting public transport approaches to Melbourne's traffic chaos, such as Melbourne Metro and removing level crossings.
 

The Federal Liberal Government must also accept its share of responsibility for this defeat. Both Denis Napthine and Dan Andrews have been professional, predictable and measured in their actions and campaigning. Tony Abbott has stomped into this relatively tranquil environment like an out of control Tyrannosaurus, attacking students and pensioners, cutting health, education, and the ABC, and trying to cut the Renewable Energy Target.
 

Prime Minister Abbott is out of touch with Victorians. Victorians want action on climate change and support renewable energy. Victorians support higher education and don't want to see a university education become unaffordable. Victorians support manufacturing industry and are dismayed at the Federal Government's contempt for the car industry and for SPC Ardmona. The result in Shepparton bears that out.

If the Prime Minister does not change, he too could lead a one term government. He should demonstrate that he is prepared to listen by abandoning his calls for the East West Tollway to proceed. This is an incitement to the new Labor Government to break its election promise on this. There was a time when Tony Abbott was very big on keeping election promises, on honour and trust in politics. He needs to remember what he used to say, and work with the new Government to implement its election commitments such as Melbourne Metro and the under grounding of level crossings.