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Could Australia be a tax haven like Ireland?

Peter Switzer
4 September 2020

Could Australia become a bit of a tax haven to attract super talent, as well as modern manufacturing businesses and, of course, hi-tech operations now ensconced in troubled places such as Hong Kong?

The Australian newspaper’s Simon Benson says the Morrison Government is backing the idea of “tax lures for foreign-based advanced manufacturers and high-value businesses of more than $250 million to relocate to Australia as part of the budget’s economic recovery blueprint.”

Simon says there’s a taskforce set up to look at attracting mining, technology, food, agri-tech, aquaculture, medtech, biotech and pharmaceuticals business to set up here. And it has been discussed at the National Cabinet level because the States would clearly be beneficiaries and would need to help make the Aussie tax haven look appealing.

Of course, this comes as places like Hong Kong have their issues with an ever-encroaching Beijing. And then there’s the unignorable threat of virus threats coming out of Asia.

Even with Victoria’s problems, Australia is still seen as one of the best countries for handling the Coronavirus, especially on a death rate basis. And then there was another unignorable plus for the land of Oz — 29 years of economic growth without a recession. And that was only trumped by a once in a hundred years global pandemic!

In 1991, the Irish movie The Commitments was made and I’ll always remember the abject economic misery the young people, who aspired to sing their way to success, lived in. It’s described as a musical comedy but how these people lived made Ireland look like a third world country.

Nowadays, Ireland is celebrated as one of the fastest growing economies in the EU and they can’t thank their awful weather or their Melbourne Cup winning horses for that. In the 1990s, the Irish lower company tax rates attracted US companies in particular to the Emerald Isle like moths to a light bulb.

Here’s a list of pretty well-known companies that now live, for tax purposes, in Ireland — Google, Apple, Facebook, PayPal, Microsoft, Yahoo, eBay, AOL, Twitter, Intel, Pfizer, Boston Scientific and Johnson & Johnson.

It was an issue that annoyed Donald Trump early in his reign as President, and still does. In May, The Irish Times reported that “US president Donald Trump has singled out Ireland as he vowed to bring global pharmaceutical production back to the US.”

Noting that 94% of US drugs were made abroad, he said: “It’s not only China, you take a look at Ireland. They make our drugs. Everybody makes our drugs except us,” he said. “We’re bringing that whole supply chain back. Nobody has to tell me to do it, I’ve been talking about that for years.”

Yesterday I gave a ‘virtual’ speech for the Mortgage and Finance Association of Australia online and told the 4,000 or so mortgage professionals watching that in these challenging Coronavirus times (especially for those in Victoria) it’s crucial to use the threat of the virus to business and look for opportunities.

As a business that was planning to do 16 live events this year, we’re now moving into virtual or online conferences and have a small cap conference lined up for October 30, where smaller companies will get a chance to ‘pitch’ their businesses to potential investors.

So if it’s good for businesses to think outside the square, it’s just as good for countries and national governments to look to new ways to get economic growth happening here.

It will be interesting to see how Labor reacts to this idea, as it potentially should be positive for jobs for many of the typical people who might vote for the party that historically has represented working Australians.

This initiative will test the Opposition to see if Albo and his team can become more business-friendly, if only for job creation reasons.

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