The head of the Business Council of Australia (BCA), Catherine Livingstone, has called for a national “conversation” about what the federal government and the business community euphemistically call “economic reform”.
Ever in thrall to trickle-down economics, they manage to talk in “doublespeak”, a close relative of the doublethink that George Orwell wrote about in his novel Nineteen Eighty-Four.
Livingstone called for changes to education, innovation policy and the GST. This translates to less company tax, raised tertiary education fees, higher regressive taxes on goods and services, and tax breaks for companies investing part of their profits in the pursuit of further profits.
Livingstone should get out a bit more. There is an earnest conversation that is being held daily across the nation.
Those participating in it include the 2.4 million age pensioners who are anxious and angry that the social contract they entered into with the state, which reserved a portion of the taxes that they willingly paid while working in exchange for the frugal comfort of a modest retirement income, is being torn up.
So too are the 1.6 million Australians on the disability pension and reliant on the woefully inadequate Newstart and Youth Allowance who will be forced onto a punitive Work for the Dole scheme.
Also taking part are the hundreds of thousands of young people wondering how they can afford to go to university. They have now been joined by those working for the 60,000 not-for-profit organisations in the country, which will be subject to a tax review examining the appropriateness of the tax deductable gifts that they rely on.
The urgent economic reform we should be talking about is eliminating corporate tax rorts.
Fairfax Media reported that Rupert Murdoch's News Corp in the US has siphoned off $4.5 billion in cash and shares from the Australian arm of the company over the last two years for a tax bonanza.
University of NSW accounting academic Jeffrey Knapp says Murdoch’s Australian companies have paid income tax at a rate of 10% of operating profits for the past 10 years.
A spokesperson for the company is reported as saying: “Our financial reports comply with Australian Accounting Standards and the Corporations Act 2001, have received an unqualified audit opinion and are filed with the regulator, ASIC. Beyond this we have nothing further to add.”
This seems to suggest an amendment to the Corporations Act is needed, something that has been proposed by accounting specialist, University of Sydney Professor Emeritus Bob Walker.
But News Corp is not alone. In the 2011-12 financial year, about $60 billion in what are known as “related party transactions” went from Australia to tax havens.
It took an application under the Freedom of Information Act for Fairfax Media to obtain an internal Australian Tax Office memo that listed 10 companies that channelled more than $31 billion from Australia to the low-tax jurisdiction of Singapore in 2011-12.
They included one energy company operating in Australia that transferred $11 billion to Singapore where the corporate tax rate is only 2.5%. In Australia the corporate tax rate is 30%.
When asked to reveal the names of the 10 companies, Tax Commissioner Chris Jordan — a former partner in the accountancy firm KPMG who played a major role in the introduction of the GST by the Howard government — claimed “public interest immunity” in his refusal, asserting that “tax confidentiality” encouraged taxpayers to disclose information voluntarily.
He again refused to disclose the names of the companies when appearing before the Senate inquiry into corporate tax avoidance in Sydney on April 8.
At the hearing, Google and Microsoft admitted to channelling the bulk of their Australian sales through Singapore. They, along with Apple, are being audited by the Australian Taxation Office.
In a letter to the senate committee, Jordan revealed that his refusal to name the 10 companies had been endorsed by Treasurer Joe Hockey.
This is no surprise. The Treasury has called for raising the GST and suggested that the corporate tax rate be lowered to 10%. Just before the release of a white paper on tax reform, it cautioned against excessive regulation to stop corporate tax avoidance.
In the circular conversation that the Abbott government has with itself, corporate greed trumps community need every time. Just Google it.
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