Former treasurer Joe Hockey ‘angry’ at PwC tax leaks

Joe Hockey is ‘frustrated and angry’ at the reported behaviour of some PwC executives, who used information from their work with the ATO to help clients avoid tax laws he introduced.

Former Federal Treasurer Joe Hockey is known to be “frustrated and angry” at the reported behaviour of some PwC executives, who used information from their consultation with the Australian Taxation Office to help multinational clients avoid tax laws he introduced as Treasurer.

Mr Hockey, the federal treasurer who introduced the anti-tax avoidance legislation in 2015, has kept a low profile on the controversy, refusing to make any public comment on the issue on the revelations that some PwC executives used consultations with the ATO to help clients avoid the tax.

But friends say he sees the reports of PwC behaviour as a “massive breach of trust which could potentially undermine reasonable consultation between government and the private sector on the implications of proposed tax changes.”

Mr Hockey announced the proposed legislation to crack down on what he said were “blatantly artificial (tax) schemes like the double Irish Dutch sandwich” in the federal budget of May 2015, and introduced the enabling legislation later that year.

Mr Hockey was not involved in the consultations with PwC, which were conducted directly with the ATO over the legislation.

It is understood he only learned of the PwC’s behaviour through recent media coverage of the issue and has been concerned that the reported behaviour could put at risk broader consultation between government and the private sector for fear that companies could seek to gain commercial advantage from the process.

Mr Hockey left politics in 2015, soon after introducing the legislation, stepping down as Treasurer after Malcolm Turnbull successfully challenged then Prime Minister Tony Abbott for the Prime Ministership.

Australian Ambassador to the US from January 2016 to January 2020, he now runs a private consulting practice called Bondi Partners with operations in the US and Australia.

Mr Hockey’s second reading speech for the legislation, made in September 2015, outlines the ambitious aims of the laws, which were seen as Australia’s contribution to global action by the OECD and the G20 to crack down on artificial tax avoidance schemes.

Mr Hockey told parliament that the legislation was aimed at cracking down on “the use of egregious, complex and blatantly artificial schemes like the double Irish Dutch sandwich.”

That scheme involved the paper passage of profits between Ireland and the Netherlands Antilles to avoid tax.

Outlining the legislation, Mr Hockey said the use of artificial tax schemes “undermines the public’s faith in the tax system and leaves families and small businesses to unfairly carry the tax burden.”

The legislation followed Australia’s presidency of the G20 in 2014 when the grouping oversaw the first of the OECD and G20’s recommendations to combat tax base erosion and global profit shifting by multinationals.

Mr Hockey told parliament that the measures would apply to more than 1,000 companies with annual global revenue of more than $1bn, which he said represented “the highest risk to Australia’s tax base.”

The ATO estimated at the time that some 30 large multinationals were engaging in commercial activities in Australia but using “contrived structures to book billions of dollars of revenue overseas and avoid Australian tax.”

Mr Hockey told parliament in his September speech that the ATO had already been “contacted to discuss how companies might restructure their activities to book their revenue in Australia and pay their fair share of tax.”

Companies who felt they might be affected by the new law were urged to contact the ATO to discuss their situation.

Two days after this second reading speech, Mr Hockey resigned from Cabinet after Malcolm Turnbull’s successful push to become Prime Minister, announcing his plans to leave politics.