October 6, 2024

turnbull

New report demolishes Liberals’ argument for corporate tax cuts

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Multinationals move $16 billion from Australia to tax havens each year.

A groundbreaking report has found that corporate tax rates have been driven lower by multinational corporations shifting profits to tax havens rather than by competition for capital among different countries.

The Turnbull government has argued that lower company taxes will encourage companies to invest in Australia, boost productivity and lift wages.

The study, written by economists from the University of California, Berkeley, and the University of Copenhagen, and published by the National Bureau of Economic Research, debunks this idea.

“Machines don’t move to low-tax places: paper profits do,” it says.

“By our estimates, close to 40 per cent of multi-national profits were artificially shifted to tax havens in 2015. This tax avoidance and the failure to curb it are the main reason why corporate tax rates are falling globally, not tax competition for productive capital.”

Australia’s corporate tax revenue was reduced by about seven per cent by profits moved to offshore tax havens – roughly $5.4 billion in lost revenue in 2017.

The paper outlines how multinational corporations such as Google, Apple and Facebook have changed the global tax system.

“In 2016, Google Alphabet made $19.2 billion in revenue in Bermuda, a small island in the Atlantic where it barely employs any workers nor owns any tangible assets, and where the corporate tax rate is 0 per cent.”

Hospitals before tax cuts: poll

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Voters want the Turnbull government to increase funding for hospitals and schools rather than cut personal income tax.

A majority of voters chose increased spending on healthcare (67 per cent), aged pensions (56 per cent), education (55 per cent) and affordable housing (52 per cent), as their budget priorities for 2018.

They stated their preferences in a Guardian Essential Poll taken just before the May federal budget.

Only 17 per cent nominated personal income tax cuts as the most important issue for the budget to address.

Despite public opinion, a package of tax cuts to be introduced in three stages became the centrepiece of Treasurer Scott Morrison’s budget. When they are finally implemented the cuts will take $144 billion out of the public purse.

According to the Parliamentary Budget Office (PBO), the biggest winners from the tax package when it is fully implemented will be high- income earners:

  • A worker on $200,000 will get a tax cut of $7,225
  • A worker on $60,000 will get an annual tax cut of $540.

The PBO calculates that men benefit twice as much from the tax cuts during the first two stages 
due to Australia’s gender pay gap, and by nearly three to one after the third stage.

A tax expert from the University of Melbourne Law School, Miranda Stewart, told the Senate’s economics legislation committee that the tax changes were an “inefficient and a retrograde step that undermines the 100 years of progressive tax rate structure in Australia”.

Another analysis, by the Australia Institute, found that wealthy Liberal-held seats were the biggest beneficiaries from the tax cuts, with Malcolm Turnbull’s seat of Wentworth the biggest winner.

A household in Wentworth will receive double the national average from the tax cuts.

Two experts from the National Social and Economic Modelling Centre (NATSEM) – Dr Jinjing Li and Professor Robert Tanton – told the online magazine The Conversation that the tax cuts highlighted the need for a national discussion about how government revenue is spent.

“We can either spend this windfall gain on benefits to high- income earners in the hope that this will flow through spending to everyone else, or maybe we should encourage young people into housing through an increase to the first home owners grant, or increased funding for our schools, universities and health system,” they wrote.

Turnbull’s Family and Domestic Violence Leave is inadequate

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Five days-unpaid leave is not nearly enough for women to make themselves and their families safe from violence.

The five days of unpaid Family and Domestic Leave (FDV Leave) announced by the Turnbull government last month is a very small step in the right direction but doesn’t provide nearly enough time or money to ensure women experiencing violence can make themselves safe and protect their families, say unions.

Research shows that it takes significant amounts of time and money to leave a violent environment.

There is a significant expense for truck hire, removalists, new schools, childcare, police and court appointments – all to be done in business hours.

According to research, leaving an abusive relationship and finding a new, safe place to live costs on average $18,280 and takes 141 hours. The Turnbull government has granted 40 hours unpaid. Unions have been seeking a minimum 10 days FDV Leave to assist working people experiencing violence.

“The Turnbull government’s proposal is five days of no income. Nothing to help pay the lawyer’s bill, nothing to help move to a safer home, nothing to keep the lights on,” said ACTU Secretary Sally McManus.

“No worker should have to choose between keeping their job and keeping their family safe.

“The Turnbull Government needs to do more to assist women, who are being killed every week by abusive partners.”

Zombie TPP hurts Australian job seekers

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Malcolm Turnbull’s new Trans-Pacific Partnership trade agreement gives six countries unlimited access to Australian jobs.

The Turnbull government has agreed to a revived Trans-Pacific Partnership (TPP) trade deal that will allow employers to import “temporary” workers from at least six countries without first advertising jobs to Australians.

The TPP will allow unlimited access to workers from Canada, Mexico, Chile, Japan, Malaysia and Vietnam in 435 occupations.

The peak union body, the ACTU, has strongly criticised the move.

“This agreement will allow employers to overlook local workers for good steady jobs like nurses, engineers, electricians, plumbers, carpenters, bricklayers, tilers, mechanics and chefs,” said former ACTU President Ged Kearney.

“In regional areas where youth unemployment is at crisis point this is simply unacceptable.”

She said the failure to make companies test whether local workers were available for jobs would permit the “wholesale exploitation of migrant workers, while also tearing the bottom out of the domestic labour market”.

Labor’s shadow trade minister, Jason Clare, told The Guardian newspaper that Australians “hate” jobs going to migrants “without first checking if there is an Australian who can do that job”.

“Turnbull should put Australian workers first and reinstate labour market testing in the TPP for those countries.”

Labor policy is that, if elected, it would conduct independent modelling of the costs and benefits of every new trade agreement before signing, including the effect on jobs.

A secret till it’s signed

The TPP was thought to be dead after President Donald Trump pulled the United States out of the agreement last year.

But the Turnbull government lobbied to keep the TPP alive and 11 countries agreed to a new deal without the US last November. However, the text of the agreement has remained secret.

The Sydney Morning Herald’s economics editor, Peter Martin, highlighted this secrecy when he asked: “What’s in the revised Trans-Pacific Partnership deal for Australia? There’s no way to tell until we’ve seen the text, and we won’t see it until after it’s signed, in Chile on 8 March.”

Martin said the TPP would allow foreign companies to sue Australian governments in extraterritorial tribunals if they took decisions that harmed their commercial interests – “as Philip Morris did over Australia’s tobacco plain-packaging laws using the terms of an obscure Hong Kong investment agreement”.

“John Howard successfully resisted having them in the US-Australia agreement and the Abbott government managed to avoid them in the Australia–Japan agreement, but we have apparently agreed to them now, for Japan, Korea and eight other nations.

“The best guess as to what the trade and investment concessions do for Australia financially, from the respected Peterson Institute, is ‘not much’. Australia’s national income would eventually be 0.5 per cent higher, a gain of less than half of one-tenth of a per cent per year.”

The new TPP also contains a “state-owned enterprises” provision, which allows foreign companies to take legal action for damages if public enterprises present “unfair competition”.

Dr Patricia Ranald, convener of the Australian Fair Trade and Investment Network (AFTINET) says the TPP would also restrict Australian governments from re-regulating essential services like energy or financial services, despite demonstrated market failures.

“As usual, the government has released only positive information about possible market access gains from the deal, but the full text of the changes is not available for public scrutiny. The full text will only be released in March at the time of the signing of the deal,” she said.

Multiple attacks on rights at work

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Inequality is at an all-time high, profit growth is the strongest it has been in 15 years and wage growth is the lowest on record.

A parliamentary inquiry into corporate avoidance of the Fair Work Act “paints a damning picture of a government and a minister who is letting corporations trample workers rights,” according to the ACTU. 

The Lamp looks at a raft of measures including new laws and industrial decisions that aim to tip the playing field even more in favour of employers:

Collective bargaining on the rack

A decision by the Fair Work Commission to cancel the enterprise agreement covering Murdoch University staff – a decision supported by the Turnbull government – has serious ramifications for our enterprise bargaining system.

At Murdoch University, 3500 staff lost the protection, wages and conditions they negotiated with their employer in good faith.

Industrial lawyer Josh Bornstein said the Murdoch University decision “shows how easy it is for employers under our legal system to quickly eliminate employment conditions obtained from decades of collective bargaining”.

ACTU Secretary Sally McManus was even blunter. “This shifts power radically to employers,” she said.

$10 million fines for striking

In a competition law bill the Turnbull government aims to increase the minimum penalty for a strike or boycott in support of another dispute from $750,000 to $10 million – 800 times greater than for the equivalent provision in the Fair Work Act banning unprotected industrial action.

Outlawing the right to silence

The Turnbull government introduced a bill into parliament last month – ironically called the Vulnerable Workers Bill – that would deny the right to silence.

The bill was an extension to all Australian workers of the coercive powers originally aimed at construction workers through the notorious Australian Building and Construction Commission.

If the bill had passed into law it would have given powers for any worker, at any workplace, who took what should be legal industrial action, to be forced before the Fair Work Ombudsman (FWO) to give testimony against themselves, their colleagues and their union.

Failure to comply with the FWO notice would have brought a $126,000 penalty.

Had the original bill passed it would have seen all working Australians lose the right to silence during a government investigation into unprotected industrial action.

The measure would have impacted on workers like the journalists at Fairfax who took unprotected industrial action in May when their employer announced widespread redundancies.

The ALP combined with the Nick Xenophon team, the Greens, Jacqui Lambi and Derryn Hinch to force the removal of the coercive powers from the bill. One Nation supported the government’s position.

Penalty rate cuts

One quarter of Australia’s workers work on the weekend when they give up time with family and friends and miss out on special occasions with their loved ones. Late last year 11 large employer organisations supported by numerous conservative politicians argued for a cut in penalty rates.

In February this year the Fair Work Commission obliged them and cut penalty rates in four industry awards: in the hospitality, fast food, pharmacy and retail sectors.

The decision cut Sunday and public holiday penalty rates for 700,000 workers by between 25 and 50 per cent.

This decision supported by Malcolm Turnbull and his government could spread to other sectors including healthcare.

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Underpayment of wages and superannuation

Employers hurt thousands of workers every year by deliberately underpaying wages and refusing to pay mandatory superannuation. The ACTU rightly calls this “wage theft”.

According to Industry Super Australia 2.4 million workers collectively have $3.6 billion in super stolen from them each year.

It is estimated that the international company 7-Eleven underpaid – stole – $110 million from their employees.

Work-for-the-dole exploitation

A $1.5 billion work-for–the-dole program called the Community Development Program that covers 37,000 mostly indigenous workers in remote areas requires people to undertake work or training for 25 hours a week for 46 weeks per year in order to receive welfare payments.

“The workers are paid $10 per hour – way less than the minimum wage of $18.86, with no rights, no leave, no superannuation, no workers comp – so much less rights than any other worker,” ACTU Secretary Sally McManus said.

She pointed out that these jobs previously attracted award wages and conditions and employers were now getting free labour.

Be alert, be aware and join the fight to defend penalty rates

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When it comes to workers’ rights and living standards the Turnbull government loves to play the politics of the empty gesture. What is needed is meaningful action to protect our standards of living.

Prime Minister Malcolm Turnbull said he was ‘putting Australians first’ by giving them priority for jobs currently open to overseas workers when he announced the government was abolishing the 457 temporary work visa.

Immediately the ACTU refuted the claim that this was a significant change in policy. ACTU President Ged Kearney, in a comprehensive analysis, pointed out that less than one in ten jobs had been eliminated from the scheme and the requirement to market test for Australian workers’ availability was still left up to the employer.

There is no doubt, nurses and midwives brought to Australia have filled shortages where Australian-educated nurses have either not been encouraged sufficiently to move to or where skill levels have not matched jobs.

It is, however, alarming that the sudden concern for Australian jobs and changes to citizenship requirements are seemingly in response to a political agenda beyond these policies.

This is not the first time the government has shed crocodile tears for Australian workers.

The Fair Work Commission’s decision to cut Sunday penalty rates for thousands of low paid workers came the day after the Bureau of Statistics found that wages growth had been the lowest since records began in the 1990s.

Responding to the ABS figures Treasurer Scott Morrison claimed that low wage growth was the “biggest challenge” facing the Australian government.

“The biggest challenge we have is to ensure what Australians are earning every week is increasing,” he said.

Within days he, the Prime Minister and the rest of the government were endorsing a pay cut for the lowest paid in the country.

Nurses and midwives are not immune from cuts to penalty rates

Malcolm Turnbull said it was “absurd” and “ridiculous” to claim that the Commission’s decision to cut penalty rates could affect nurses.

Not long after the Prime Minister voiced his support for the Commission’s decision and claimed that nurses were immune to a roll back of penalty rates a major health care company Sonic Health Plus were proposing exactly that (see pp10-11). Sonic, which employs hundreds of nurses across Australia tried to cut Sunday penalty rates from 75 per cent to 50 per cent in EBA talks.

Sonic was not alone. In aged care we have seen the same thing. As my colleague Lee Thomas said: “Sonic Health proves that employers are now lining up to start stripping away penalty rates from nurses and other employees”.

What has always underpinned decent living standards for Australian workers are well paid, unionised jobs, protected penalty rates, a strong safety net, a universal health system, educational opportunities for all our children and livable retirement incomes.

All these rights have been under attack by the Coalition. The government always hides behind the language of neoliberalism and trickle down economics to justify these attacks. Cutting penalty rates and cutting corporate taxes will create more jobs, they say.

This is a stale policy of privatisation, fiscal austerity, deregulation, free trade, and reductions in government spending in order to increase the role of the private sector in the economy and society and Australians deserve better.

Recently our new ACTU Secretary Sally McManus copped an enormous amount of flak when she said “neoliberalism had run its course”. It was interesting that Paul Keating, the architect of the open Australian economy, immediately supported her position.

The government is clinging to tired ideas that have only delivered inequality for working people.Trusting the market or the benevolence of employers to maintain living standards is a demonstrable failure.

It’s time for a new course and Malcolm Turnbull could make a start by stepping up to the plate and protecting penalty rates in law.

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