Tax Deal With The Devil Sees Labor And The Greens Trade Places

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After acquiescing to government legislation on terror and surveillance, Labor is now furious at the Greens for doing a deal with Treasurer Scott Morrison. Ben Eltham explains.

“Traitors.” “Dirty deals.” “Gutless Greens.”

Labor is rather upset today. As often happens in politics, the cause of the ALP’s umbrage is not its erstwhile enemies in the Coalition, but the party on its own side of the political spectrum, the Greens.

What’s this all about? The Greens have done a deal with Treasurer Scott Morrison to usher through new laws to crack down on tax avoidance.

This means the government now has the numbers to pass its Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015 in the Senate.

The laws will improve tax transparency, force hundreds of private companies to publicly report their tax affairs for the first time, and impose country-by-country reporting on big multinationals – long a holy grail for anti-tax avoidance campaigners.

In particular, the new laws will capture some 281 private companies with a turnover larger than $200 million. They have so far been excluded from tax disclosure since the 1990s, the result of a law dating back to the Hawke-Keating years.

The bill will also force multinationals making more than $1 billion a year globally to file so-called “general purpose” accounts, which are much more detailed than the sketchier “special purpose” returns many big companies have been filing. Importantly, general purpose reporting will allow for “country-by-country” breakdowns of revenue flows, which will allow much greater transparency of companies shifting their money between jurisdictions.

So, on the face of it, this is a win for those campaigning to reduce tax avoidance by the wealthiest individuals and companies.

Greens leader Richard Di Natale certainly thinks so.

“This is a huge win for tax transparency,” he wrote in a media release. “If we hadn’t got this bill passed today, multinational companies would have enjoyed another full year of not having to disclose their tax on a country-by-country basis.”

“We had a choice to either criticise from the sidelines and let multinational tax avoiders off the hook, or pass laws that force much greater tax transparency. The Greens chose action.”

Labor takes a different view. The ALP’s Chris Bowen, Andrew Leigh and Penny Wong were scathing of the deal, taking to the airwaves and the Twittersphere to condemn the Greens for their perfidy.

The gist of Labor’s chagrin is that the Greens should have held out for a better deal. According to a spokesperson for Andrew Leigh who spoke to New Matilda this morning, Labor had the cross-bench senators on board. Working together, the Greens and the ALP could have forced the government to a much more stringent deal on tax avoidance.

We’ll never know, of course, because with the Greens on board, Morrison has all the numbers he needs.

“The Government has played Richard Di Natale like a banjo on this issue,” Chris Bowen said this morning at a media doorstop. “He’s fallen for their tactics and he has sold out the Australian people.”

Richard Di Natale, Australian Greens
Australian Greens leader Richard Di Natale. (IMAGE: Kate Ausburn, Flickr).

Bowen argues that the deal excludes the bulk of the private companies that could have been forced to reveal their tax affairs. “We know from evidence from the Australian Tax Office that one in five private companies with turnover over $100 million paid zero tax,” he said. “The Greens and the Liberals have conspired together to see that situation continue.”

So who are we to believe? As usual with Greens-Labor spats, the truth is probably somewhere in the middle of the competing positions.

On the one hand, the Greens are right to point out that there is now a bill going through. As of yesterday there was no provision to force private companies to report their tax affairs: now there is. Country-by-country reporting is also a win for tax transparency, any way you look at it.

But Labor may be right to argue that the Greens could have secured a better deal if they had held out for longer. Bowen, Leigh, and Wong are correct in pointing out that the transparency requirement was a Labor policy, passed in 2013. After all, this is a deal cut with Scott Morrison, a minister the Greens have long painted as a right wing antichrist.

The irony of it all is that the current deal was only made possible after the government managed to pass its so-called “kidnap” amendment in October. That bill struck out Labor’s previous transparency requirement, voted up in 2013, on the dubious grounds that wealthy individuals could be kidnapped if disclosure laws forced them to reveal their personal wealth.

The amendment passed because of a stuff-up: Labor and the Greens mismanaged their Senate processes. After Nick Xenophon and a number of Labor senators didn’t turn up to speak on a Coalition amendment the speaking list “collapsed”, meaning the bill was passed on the voices. This forced Labor and the Greens to tack a new transparency bill onto a Coalition bill later in November.

Whatever the complicated provenance of the current legislation, it’s hard to see what Labor is so upset about. The deal is an incremental improvement in tax transparency. Yes, it could be better. Yes, the deal excludes many companies from disclosure. On the other hand, it does improve matters from the status quo. This is the sort of steady-as-goes legislative improvement that the ALP normally trumpets.

One thing is for sure: Labor’s complaints that the Greens “sold out” on this bill can’t be taken too seriously, when compared with the ALP’s dismal history in this term of parliament. The ALP has passed a raft of Coalition national security and data retention measures since 2013. All parties compromise when they think it is in their interests.

The Greens-Morrison agreement echoes a previous deal cut between Di Natale and the Treasurer in June, over pension changes. That deal also sparked a skirmish between the two left-leaning parties over who had sold out, and who had stood firm.

Then, as now, the real winner is Scott Morrison, once again demonstrating his cunning. No-one is talking about Morrison today, even though he will get the benefit of higher revenues from company tax in future budgets. Meanwhile, he can sit back and enjoy the spectacle of the Greens and Labor fighting each other over a tax bill few ordinary Australians will understand.

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Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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