It was one of the more bizarre sights in recent budget history: after a period of humiliation at the hands of his colleagues, the Treasurer emerged the afternoon before the budget to make a half-baked tax announcement.
It left veteran observers scratching their heads and trying to recall when something similar had happened, as if Joe Hockey felt the need to remind the media and his colleagues that he was still around. Wayne Swan and Peter Costello had never done something similar.
The announcement was about two “tax integrity” measures — because this government isn’t about tax rises, that’s a Labor thing. The second was straightforward: Hockey confirmed what everyone already knew, that the government would be falling into line with the demand of Australia’s biggest tax dodger, News Corp, that Rupert Murdoch’s online competitors like Netflix be taxed more heavily. Online downloads would now be subject to the GST, Hockey said, declaring that large IT companies were happy to co-operate with the government.
We’ll see about that. Perhaps Joe hadn’t been briefed on Amazon’s long history of fighting attempts by US states to levy consumption taxes on its products.
That Hockey was announcing what was already widely known about the “Netflix tax” suggests he was keen to make a public display of obeisance to News Corp, whose commentators in recent days has been going hard after him and emphasising the extent to which he has been excluded from the pre-budget process. It’s almost as if someone close to Rupert has drawn a big target on Hockey and circulated the picture to executives here. Hockey was keen to remind them he could still be of service.
As for the first announcement… well, it’s still unclear exactly what Hockey actually announced. This is what his media release said:
“Tomorrow night I will be releasing legislation that strengthens our anti-avoidance regime. After consultation with the United Kingdom it is clear that we do not need to replicate their Diverted Profits Tax. If we strengthen our own anti-avoidance laws to ensure the Tax Office has the powers to see through these contrived arrangements, then we will be able to recover the tax that should be paid in Australia. Our penalties for diverted profits will go further than the United Kingdom. The Tax Commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100% of unpaid taxes plus interest.”
So there’s no actual new tax, or extensions of existing taxes (hey, that’s what Labor does, not us!). There will be “stronger anti-avoidance laws” — but they appear to consist of stronger penalties and greater powers to recover unpaid taxes. And they will only apply, presumably, to companies that actually break the law — but, seemingly, the law itself will remain unchanged. The attachment for the announcement was a flow chart, which shed no light on whether there would actually be legislative changes to reduce the opportunities for tax avoidance. Asked to explain how much additional revenue the announcement — of whatever it was — would generate, Hockey declined to answer.
If you didn’t know otherwise, you’d think Hockey had gone out the afternoon before the budget simply to announce something everyone already knew, and something else that he couldn’t quite explain and the revenue potential of which he didn’t know.
Then again, Hockey had had a rough 24 hours. He’d been humiliated by Laurie Oakes, who’d taunted him about his unwillingness to discuss the childcare package that was explained in detail in the News Corp tabloids. Then Scott Morrison, smirk firmly on display, took the spotlight with the Prime Minister to announce — yet again — the childcare package. Then Morrison compounded the problem by comparing Hockey on radio to Greg Bird, a rugby league player noteworthy for urinating on a police car, being charged in relation to cocaine and being suspended during the most important part of the season. Even devoted Coalition spruiker Ray Hadley was taken aback by what seemed a wholly inappropriate comparison by Morrison. Morrison later tweeted, presumably after furious googling of league players named Bird by his staff to find someone appropriate, that he’d meant Jack Bird, whom even many league fans had never heard of.
Presumably the fallback was Morrison indicating an unexpected but admirably bipartisan regard for Labor’s Sharon Bird.
Still, points to Hockey for rediscovering his bonhomie pills at the presser. Gone was the dour, depressed body language of recent days, replaced with the cheerful, avuncular Joe of old. And asked about Morrison’s stumble, he declared “I’m a rugby man”. Not exactly the sort of thing likely to win the hearts and minds of western Sydney or Telegraph readers. But at least he was honest.