Continuing Hayne Royal Commission revelations of institutional dishonesty by Australia’s big four banks have not only killed off Malcolm Turnbull’s chances of further company tax reform, they are helping to destroy his prime ministership. Turnbull’s strong opposition to setting up the much-needed RC is yet another political open sore to take to the coming election – if he survives the next inevitable spill motion. There is now no way a tax cut to the big bad banks is electorally acceptable. And Bill Shorten reckons he is saving taxpayers’ money by costing Australia’s disgraced big banks a huge $17 billion. That’s their share of Shorten’s (made-up) $80 billion ‘handout to big business’ in the government’s proposed extension of its already legislated small business tax cut (from 30 per cent to 25 per cent) that Shorten is blocking in the Senate. ‘If the four recent by-elections were a referendum on Turnbull’s corporate tax cuts, voters around the country have rejected them’, he told parliament. Turnbull’s tenuous 7-member hold on leadership, his failure to break a century-old tradition by winning an opposition seat in a by-election, his continuing poor opinion polling, and Hayne’s horror stories have done nothing to win over the four Senate votes still needed to get the big-end tax cuts through the Upper House. Unless there are some major changes in the political environment, it is most unlikely that this tottering government will seek re-election by again proposing to cut taxes for big business — and the banks.
Do not expect meaningful campaigning support to come from the business community, no matter how much it is in their economic best interests to do so; corporate timidity and reluctance to get executive hands dirty in a political stoush (and fears of retribution when Labor is restored to government) have ceded the contest to Shorten. The need to maintain a competitive tax rate for the sake of Australian prosperity and jobs has been overwhelmed by Labor’s politics of envy and the Royal Commission. Attempts to make out that corporate profits (and lower company taxes) are good for ordinary Australians (especially through their superannuation funds) and are not just for the excessively remunerated ‘big end of town’ are not helped by the opaque nature of Australia’s beneficial ownership laws. It is hard to make a case that ordinary Australians are de facto owners getting an indirect benefit from lower company tax when the Corporations Act does not define ‘beneficial owner’ and does not require the name of beneficial owners of a listed company’s shares to be shown on share registers. So these are all dominated by nominee companies acting as ‘legal’ (but non-voting) owners on behalf of the beneficial owners (like superannuation funds and foreigners). Despite the mounting multi-billions of dollars of Australian workers’ superannuation being invested in shares, there is no way for the public to know how significant that ownership of listed public companies really is. The top twenty shareholders required by the Corporations Act to be revealed in corporate annual reports is a meaningless parade of nominees, with one nominee company holding between 20 and 30 per cent of the big four’s shares.
There is a serious problem for the government in this lack of corporate ownership transparency. It is due to respond this month with what action it will take following submissions to its 2017 consultation paper on increasing transparency of the beneficial ownership of companies. But this was not intended to increase public knowledge of who really owns the companies they deal with and invest in. Instead, it is aimed at improving the capacity of authorities to prevent the misuse of companies for illicit activities including tax evasion, money laundering, bribery, corruption and financing terrorism. So a significant upgrading of the ASIC register is likely that would give Australian policy makers and regulators greater insights into who really owns strategic assets or who is bidding for government contracts. But there seem to be no plans (and no proposals from the major accounting and professional bodies responding to the consultation paper) to improve public access to the facts of who are the beneficial owners of major Australian companies many of whose executives act as if they neither know nor care who their real owners are.
Subscribe to The Spectator Australia today for a quality of argument not found in any other publication. Subscribe – Try a month free